Yea, you are both correct. I got adventurous and took my empeg appart just now.

This should be a fairly simple hack. Attached is a picture showing what pin needs to be cut. Once cut, something like a relay would need to be connected to the dock connector permanent power (red wire) and ground. The relay's normally open switch would need to connect between ground and the PCB side of the cut pin.

By doing this it'll emulate the action of the mechanical switch in the power connector. When the empeg is in the car it has to get +12V to the permanent power connector in order for the power-on-ignition feature to function. When this happens it'll close the relay thus completing the ground connection thus causing the player to detect Car mode.

When not in the car one can provide power to the player via the normal AC connector or via the ignition sense and ground connectors on the dock connector and it'll detect Home mode.

Cool, yes?