I've seen this done before, but never found a clear guide on how to do it. I've written a rather lengthy and longwinded, but detailed, tutorial on how to accomplish this. It really puts the "final touches" on nostalgic BBSing. It also gives you a great telnet client that supports BBS ANSI and has actual features.
With this tutorial you should be able to get Telemate 4.2x (or likely any DOS terminal program if you prefer Telix or Procomm Plus) running under WinXP/Vista/7 x86/x64 and OS X Lion (likely any Intel Mac OS, 32 or 64 bit) while operating as a telnet client.
Full tutorial is here: http://www.starbase21.net/telemate.html
It runs rock solid stable, even stable enough to script. I've been running Telemate Tele-Arena scripts for nearly 2 days straight without issue. So if you've got old DOS terminal program scripts for your favorite games, you're in luck!
Telemate 4.2x working 100% WinXP/Vista/7 & OSX w/telnet
Moderator: Mod Squad
Telemate 4.2x working 100% WinXP/Vista/7 & OSX w/telnet
--- Vector (aka Dave)
--- Starbase 21 BBS (formerly The MainStay BBS)
--- telnet://bbs.starbase21.net
--- Starbase 21 BBS (formerly The MainStay BBS)
--- telnet://bbs.starbase21.net