The initscripts should support demand dialing for ppp connections (in particular, if you select demand dialing, the ifup sequence will delete the /var/run/ppp-<iface>.dev file when run, and when the ppp chat session is eventually called, it doesn't use the appropriate device to dial out on). Given that you rejected my previous bug asking that diald be supported because of demand dialing, I think you should really support it then.
Our current setup will support demand dialing by add the word demand to the ppp-options list. You can do this using Linuxconf or netcfg. Try this and reopen the bug with the description of what /var/log/messages is reporting after you try to bring up the interface and then access a network function.