There is Jabber Telnet Bot that is bot that provides jabber to telnet gateway. Project is little old, and I was unable to run in successfully, but there is a chance that it will run on another configurations.
After downloading package you need to modify configuration in
cfg/jbtelbot.conf file to set host where you want to connect and Jabber account on which bot will be running. After that bot should ready to start. One big disadvantage is that when you want to change telnet host you need to edit config file and restart bot.
For me idea of running telnet inside IM to play MUDs is little weird - better solution will be use dedicated MUD client like TinyFugue that was mentioned. As I can see TinyFugue is unmaintained right now, but there is still developed client TinTin++ that offers long list of features including session logging, command history and scripts.