I needed to change 3 things to do baby jumbo for PPPoE

1. You may need to turn on LCPFix in the A&A configuration page for your line. I had trouble with it until I turned this on as it works around a BT bug where they don't correctly report your MTU to A&A. I've no idea what happens if you're not using A&A as you won't have this option but then again, they won't be using the same Firebrick router as A&A so it might be fine.

2. Set the MTU to be 1508 on the actual ethernet port that goes to the VDSL modem.

3. Set Max-MTU and Max-MRU to be 1500 on the PPPoE client configuration.

That is pretty much it. Bounced the line and A&A picked up the new MTU after a minute or so and its been working fine ever since. If you are using A&A then you should be able to see what MTU it thinks you are in the configuration page.