Just answering my own question... yes it works. Got it to work with a
SonicWall 3060 thanks to SonicWall Tech Doc.
Should work on almost any set of boxes, the fact that the IP's on either end
are public or private really does not matter. However there is one wrinkle
in using publics for the vpn cloud addresses, the box must understand to
route packets bound for those IP's into the tunnel rather than out the
default gateway to the internet. Most decent boxes are fine with this type
of configuration. Then of course there is the slightly separate issue of
mapping the public IP back to a private locally to talk to the actual box in
question, if you aren't literally assigning the public IP to it, which most
people don't.
Many places have gone to this method for all vpn's, since they were forever
having problems with overlapping private IP's amongst connecting parties.
They will only offer, and connect to, public IP's inside their tunnels.
Some places have taken to buying blocks of public IP's strictly for this
purpose (inclusion inside VPNs) that will never be publicly routed on the
Internet. Others just "borrow" them from real internet parties in faraway
places that they never expect to need to reach, which works as long as both
parties agree (ie put them in the tunnel only).
-Russ.