Can VPN traffic be passed through an edge router. I want to setup a 2950 as my Internet router then use a 3950 as the internal router. The 3950 would need to have VPN to VPN configured to an outside network.
I'm not sure i fully understand your question. IPSEC traffic is like all other IP traffic in that there are source and destination IP address in the packet headers. When the remote send an IPSEC packet to your VPN router the destination address will the IP address on the VPN router and your edge router will just forward this on, as it would with any IP packet, to your VPN router.
This does mean that your VPN router needs to have a publically routable IP address - is this the problem ?