>    - which telephone line should I connect it to
>    - can it be connected directly (i.e. are there chances of any damage
>      to the chip because of the high voltage)

You need to implement a line interface. You can't connect directly to the
phone line in any real sense.  Do a web search on DAA   At least one company
makes part 68 certed  DAAs that you can buy, and save yourself some
trouble..

You can do some horrible hardware hack and it will kinda work, and you'll
kinda screw up the line impedance, and kinda get the levels and twist
wrong...  I've designed several DAAs, but it's a bit more than an email's
worth.