After looking around, googling and searching these forums to find not a great deal of relevance, I looked through /etc/ppp/options *again*, to find options that I must have skimmed over when I realised just how much of the file was actually comment lines.
I first commented out proxyarp, since that was what the error was I figured it might be an idea to try that. But then although I connected to my ISP, it wouldn't athenticate me.
So I renabled that option, and searched /etc/ppp/options for 'ethernet', and lo-and-behold discovered the 'noauth' option commented out, with the notes above it telling me to enable it if I was having problems connecting over a modem.
And now it works. Sure, there was a warning about running noauth if pppd is running with the suid bit set, but it's not, so everything is cool again
Thanks to the handful of people who actually read this thread