The DSL Line should work fine. Also Wifi should work fine in normal AP mode. So using it as a replacement for a Fritzbox should work fine (DSL connection + WLAN + analog phone ATA).
You should sync and connect just fine to the telekom. Many users here are using it at VDSL or even VDSL Vectoring on telekom.
You would probably like to get latest vectoring firmware by using this howto: Howto: Updating the Lantiq XRX200 devices with latest DSL vectoring firmware