best is to do it through policy nat as you indicated, assume your source/inside is 192.168.1.0/24,if other end of tunnel wants you to come in NATed as 192.168.211.0/29 then you need the policy nat and appropriate acls for interesting traffic.
Something similar as the exmaple link bellow.
access-list new extended permit ip 192.168.211.0 255.255.255.248
access-list policy-nat extended permit ip 192.168.1.0 255.255.255.0
static (inside,outside) 192.168.211.0 access-list policy-nat
plus the cryptop map statements etc..
bellow is a link with good example , this link pertains to when you have overlaping networks between tunnels but the principle is almost the same.
http://www.cisco.com/en/US/products/hw/vpndevc/ps2030/products_configuration_example09186a00808c9950.shtml
Rgds
Jorge
Jorge Rodriguez