Hi All,
Just to let you know that after opening a TAC case, I managed to resolve this particular problem.
The way to handle these VPN Client connections is to create a loopback interface and set this interface to be "ip nat inside". Then you need to set up a route-map so that all traffic coming from the VPN Client is sent to the Loopback interface.
In this way, traffic from the VPN Clients is translated as it is going from the 'inside' loopback interface to the 'outside'' interface going to the Site-To-Site IPSec VPN. The link below gives some guidance ... although it is not an identical scenario
http://www.cisco.com/en/US/products/sw/secursw/ps2308/products_configuration_example09186a008073b06b.shtml
Cheers,
Denis