I've just been looking at doing exactly that.
As far as I can tell, you just need to set up the 123reg MX record (priority 5) to point to your dyndns domain - you don't need to configure dyndns MX (unless you want to send mail to
somebody@your.dyndns)
One problem that you may have (and is the reason I haven't actually done this yet), is that your SMTP server may just bounce mails for any users it doesn't know about. I tend to register site specific email addresses (e.g.
yahoo@mydomain.co.uk), and so have a lot of different usernames (and I can't remember them all). Depends if you can configure your SMTP server to accept any username and direct unknown ones to a default mbox.