That's how I assumed all of the "iPod integration" head units work -- just treat the iPod as a dumb external USB drive, and play the music themselves.

This way they have full access to the embedded tag info in the digital files, for display purposes, and they can mimic the iPod GUI (or not!) on their own display/controls.

They most likely license the Apple AAC DRM crap, and pay a royalty on the proprietary "docking connector" as well.

That's certainly how RobV's Numark DJ consoles work, and most probably how the Bose iPod "dock" works, and quite likely how the BMW and Alpine car heads do it.

Cheers