So basically I know this guy who upgraded his 1.1.2 OTB to 1.1.3 (I kno hes retarded)

I am going to buy that phone off him at a huge discount.. upgrade to 1.1.3 and activate thru iTunes.

Can I still jailbreak this iPhone?

I can still downgrade to 1.1.2 jb and soft jailbreak for 1.1.3.

Will this work and will I be able to make calls visual voicemail locate feature etc?

umm. pretty sure you can not JB with out doing the HW unlock to go back the the old bootloader.

use installer and the soft update. no need to restore etc. very simple. or just use ibrikr.

Just remenber, going legitly activate means you will be using ATT or whatever lock they have