It's not too technically difficult to tap modem connections at low speed, I played around with it a few years back, and I was able to add a third modem onto a 300 or 1200 baud connection and view what was being transmitted. Using the modem as a dumb interpreter of the signal works well to analyze the raw data being transmitted at low speeds, but when you use v.42 and LAPM, things get a bit more complicated. You need special hardware/software to interpret and decode the compressed & checksummed data packets.
Actually, there's another way if you can tap into the RS-232 pipeline itself. I've seen a box in a catalog that offers a three way RS-232 split. What I would do with it is to actually build something like that myself and take the send/receive lines and hook them up to another machine to capture the transfer of info between them. I could then capture any data coming through the lines. Uses for this: if you suspect someone is breaking into your machine or some other machine via a dial up line and want to capture some proof of it. (Cliff Stoll did this with a printer.) You can't actually tap into the phone line with this of course.. :-) But there are better things to do. For one, you can buy a portable DAT walkman and a large capacity DAT tape, and dump everything to the tape, then have your modem decode the conversation, but you have to filter out one side or the other. While this may be hard for Joe Hacker, it wouldn't be hard for Joe Rockwell who works in a modem factory and can build a special box based on the Rockwell (or other) chipset to spy on the modem conversation. A long long time ago, when a friend of mine was running a BBS (at 300bps) and his machine was down, he put a 300bps recording of his modem writing "Sorry the BBS is down" on an answering machine. The timing was a bit screwey, but the message got through most of the time. :-)