This is how most Avaya phones are setup and when people move to Cisco, they want to keep it the same way. This is definitely do-able using multiple partitions and Calling search spaces.

Line 1 will forward on busy and no answer to Line2. Line 2 will forward on busy and no answer to voicemail.

In my opinion, apart from perception, this configuration is a waste of time and energy. The dial plan becomes a bit more complex and you waste an extra button on the phone, which could be used for an extra speed dial or service url or with CM 6.0 you could program this extra button as a PLK (Programmable Line Key). You have call waiting capable lines on a single line, and with effective training, users can get used to easily switching between multiple calls on the same line. To join or bridge two calls, you can easily use Select and Join soft keys.

HTH

Sankar