DNS in your network should point to translated addresses of the other network.
NAT works both ways in this example, so devices in one network communicate to OUTSIDE LOCAL address, which is translated afterwards to the OUTSIDE GLOBAL.
In your example:
Perspective 1:
NET1 192.168.0.0/16 = inside local
NET1 172.16.0.0/16 = outside local
NET2 192.168.0.0/16 = outside global
NET2 172.16.0.0/16 = inside global
Perspective 2 is reversed.
These two documents will help you understand the concept better:
http://www.cisco.com/en/US/customer/products/ps6640/products_white_paper09186a0080091cb9.shtml
http://www.cisco.com/en/US/tech/tk648/tk361/technologies_configuration_example09186a0080093f30.shtml
Hope this helps.
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