can the sx200L/EL system support line side T1? (my understanding of line side T1 is that the PBX acts like a CO to the peripheral equipment you are setting up)

If yes, what would be the T1 type and what version of software do I need?

depending on how complex you want to get the PBX can somewhat act like a CO you can use ARS, alot depends on your numbering plan, and I have networked Mitel useing E&M T-1's that way you can modify or massage the digits coming in and going out