It's possible. I used to have to do it at work on a machine connected to the LAN so that I could test things from outside the network back in the old days.
(I'm not sure if Home edition has any caveats for this though).
Just create a new connection in the network wizard under control panel and follow the prompts for setting up a dial up connection.
Something like:
Connect to the Internet
Set up connection manually
Connect using a dial up account
As far as getting web browsers to work, I don't think you have to finagle anything.
Sorry I can't be more specific right now. I'm at work.
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