I've ended up connecting Telo to Base Station and it works fine. My experiments convinced me that our Apple Extreme is quirky and unpredictable, often inaccessible via the Airport Utility even though it was providing proper connectivity via both wireless and wired. Sometimes the airport utility on the wired connection could not see the base station, but the wireless connection could, sometimes vice versa. Sometimes only a soft reset would again make it visible. I've upgraded and downgraded firmware and software and no combination is totally consistent. We also have to reset the router about once every month because it stops working.
So my plan is to begin using the Telo in this configuration (connected to Base Station) to get my feet wet, and when I get Uverse installed in a few weeks, I will ditch the Base Station and use the Uverse gateway as my wireless router, and will connect the Telo directly to the LAN port on gateway. I'm sure that will be a whole new adventure.
So far the only thing I don't like about the phone is the scraping little jingle it plays before the dial tone. That will be my first configuration change.
thanks for all help