Finding an inexpensive router that supports PPPoA is probably more difficult than getting your USB modem working directly. (Lack of third-party consumer support and control over customer equipment is one of the reasons ISPs choose PPPoA over other DSL configurations.)
It sounds like smpppd isn't communicating with your modem properly. You can ignore the "Couldn't increase MTU to 1500" error, which is just a warning letting you know the requested MTU isn't supported by the interface. "Inappropriate ioctl for device" is the error we're trying to fix.
Check
http://speedtouch.sourceforge.net/ for the latest Speedtouch driver. The included INSTALL file has instructions for compiling, installing, and configuring the driver.
The latest driver combined with the correct smpppd PPPoA configuration should fix the problem.
I've never used smpppd or a Speedtouch USB modem, so I could be leading you down a dark and dangerous path.
Trev
