On the 7204, what are the EIA stats shown at the bottom, I might guess that DCD and CTS are down and the rest are up.
If so, then because the line is down, the upper layer protocols will never initiate. In other words, if the Physical layer is down, PPP will never initiate as that is a layer 2 protocol and you would not see any PPP negotiation. Within PPP, there is LCP and NCP. Within NCP is the protocols negotiated such as IP, IPX, and so on. Internet Protocol Control Protocol is IPCP which is just IP negotiated during NCP. If you had IPX configured then you would see IPXCP, bandwidth on demand would be BACP, Appletalk would be ATCP, and so on.