Seth Schoen, EFF's staff technologist, attended a talk on wiretapping techniques at Stanford and produced a set of fascinating, thoroughgoing notes:
Loop extenders connect target line to a designated "friendly" line. The part at the telco is the loop extender, and the part attached to the friendly line back at the LEA is called a dialed number recorder (DNR) or collection device. The loop extender must perform some kind of electrical isolation to prevent detection. Interestingly, all of the audio is always sent over the friendly line; the only difference between a pen register and a full-audio collection is the configuration of the collection device equipment at the LEA's premises. The phone company can't directly control what LEAs see.
It's inconvenient to get this equipment in order to study it because normally only authorized agencies are allowed to possess it. 18 USC 2512 may make it a felony to own the equipment. Vendors also won't necessarily sell it to just anyone.
"So, we had to shop on eBay."
LEAs, like everyone else, sell their used equipment on eBay. Within about a month, you'll get a lab full of wiretap equipment sold at bargain-basement prices. (Also, they often accidentally sent you recordings of old taps!) And it even looks like wiretapping equipment.