Dialer-watch works on the watched route updates..so if you are getting the routing updates on dsl line, dialer watch will work.
Designing the backup for DSL line using isdn is very tricky issue.
There are many posts on that regards..Here is one popular answer for that
Router need to know "some way" to determine that the dsl line went down...Here are the facts in your case.
1)Dialer interface will not go down at all so can't "backup interface" scheme on that interface
2)If No routing protocol running so can't use "dialer watch" for the routing update.
So, You can only use the following command "backup interface bri0" under the "interface atm0"..Which makes bri available only when the atm interface went down..But that tracks layer 1 issues only, so there are no way to achive a backup based on layer 3 issues over dsl/atm line.
There is a feature request CSCds88143 to address these scenario..Its not solved yet..Talk to your cisco rep.. to push it..
Here is the url which will help you to decide the backup scheme for that
http://www.cisco.com/warp/public/123/backup-main.html
