You can do something similar already. They are called FM radio signals. With an FM Modulator, you can take the output of the portable MP3 player (Pearl, for example), and send a signal that your car stereo can pick up (FM station 87.9 for example, or any other station for that matter). You lose some audio quality with the conversions, but you still get a pretty good signal.

The problem is, few people know about these. Even among those that do, they would still need to do research to find the right parts and order them. The Pearl or similar could easily appeal to the mass market if it came with an optional kit (mounting bracket with built-in cigarette adapter and FM modulator).

-Biscuits