Yes, from what I have found since my original post there modem can be used. As far as I can see any PPPOE VDSLmodem can be used with a Draytek.
We will need a new router, as we will most likely upgrade both of our lines from Annex M to VDSL. We use two lines on the same router so we can give our mail server priority on one line. The Draytek has been by far the best router I have seen, I want to stick with the brand, they even fixed our VPN tunnel remotely when I called support once.
I did ring Draytek about a VDSL modem, but they only have an ADSL one in their range at the moment. (the Vigor 120). I guess it's still early days!
Looking forward to going from 12 Down / 2 Up to near 60 Down / 20 Up for the same cost as our current lines.