Been out for a few days.
Running output through sed instead of redirecting to /dev/null: You can indeed clean up the output this way. However, a cron task that generates output to stdout will result in an email being generated. If all you do is clean up the "." characters, you will still get an email. You could, though, redirect the output to a log file, which would save the output for you but prevent the emails. You could even redirect the output to a perl or bash script of your making, at which time you could do just about anything.
Changing the dialup interval: You can't simply change the interval setting to "every2min" or whatever. The e-smith scripts, contrary to what you might expect, don't parse the interval out of the configuration string. The string is a literal value which is used in a case to set the value. In other words, "every5min" could have just as easily been "frequently" -- there is no real meaning to the string itself except as a selector.
To achieve the change you want, you would need to find and modify the script(s) and/or template(s) that use this setting, to also recognize a new setting of "every2min". When I have some time, I'll poke around and see if I can tell you which files are affected (or perhaps Charlie or Gordon can fill in this blank?)