In detail, the process goes like this.
First, from a machine inside the firewall, telnet to a target machine outside the firewall and log in.
Unless you are under linux and will be using the proc filesystem (see below) make sure your shell is an sh style shell. Ie if your default shell is a csh variant, invoke telnet by
(setenv SHELL /bin/sh; telnet machine.outside)
After logging in, on the remote (outside) machine invoke the command
term -r -n off telnet
Now break back to the telnet prompt on the local (inside) machine, using
^] or whatever, and use the telnet shell escape command
! to invoke term,
telnet> ! term -n on telnet >&3