Here's an idea (that mightn't be possible or practical), and I'm showing I'm an engineer for sure...

Playback a sine wave sweep and/or pink noise and sample on your PC sound card. Then do a frequency plot of that. Do one with the iPod and one with another player that sounds OK. Might give you an idea of what's not working.

Obviously best if you can do this with an uncompressed signal but not entirely necessary either. Also it depends on how good your soundcard/onboard sound is but these days I think almost anything would be good enough to get some idea what's wrong.

Whilst writing that, it's not some silly EQ setting turned on? Never used an iPod so not sure what kind of options are there.