Alec Saunders (www.saunderslog.com) has done research on the "Iowa model". While it is creative, I don't think there is any harm in using this. Companies have been doing this for a while before it caught on in the Voip world.
Any idea HOW this works? Are the calls simply routed through their service (as opposed to the cell network) and they are spoofing the CID from their network?