It depends .. custom linetypes are available in Microstation, but the inclusion of linetypes that require complex entities (shapes and true type fonts) are not supported by Microstation .. although I have heard that XM is supposed to support them, I cannot confirm.
Let me re-state this one a bit differently.
Microstation will support using text (including TTF) and point cells in custom linetypes.
Autocad custom linetypes are not interpreted by Microstation reading from the acad.lin file
When a dwg is opened in MS the custom lines are continuous. Times this by thousands of drawings containing acad custom lines.
I guess I really know that there is no easy solution to this problem.
Thanks for the help guys!