I downloaded Procomm Plus for DOS a few days ago and tried to connect to some telnet BBS' myself. I couldn't make it work correctly using a dial entry and simply had to manually key the ATDT command with the ip/domain : port as follows:
ATDTonline.bbsnet.com:23
That would get me connected and all the color would be enabled. Trying to replicate the same thing using a dial entry in PCPlus always resulted in a one color display for the BBS. The only thing that I haven't gotten working is file transfers. That's not really a big deal though.
When using a dial entry, the program would begin to dial and though it would immediately connect, the program would think it was still dialing until it hits your time limit to try again. The trick is start it dialing for a few seconds and then hit ESC to go back to the "console" and you will see you have been connected to the BBS.
Of course dial entries don't work 100% so manually keying in the ATDT command on the console, while less convienent, seems to work better. There may be a better solution however as this information is the result of only a few hours of messing around.
One more thing: Be sure to have the line serial1=modem in your dosbox.conf file. As that is what allows you to telnet using the COM port from within DOSBox.
EDIT: Oh and one more thing: When DOSBox has trouble with the connection, the app appears to lock up and not be responsive until the issue can be resolved. I've seen DOSBox crash as a result of this. This is worth keeping in mind. However I'm using a custom build of DOSBox under OS X, so this problem may be limited to just my build. I haven't tried this on any official compliations yet.