I saw this on Mac Rumors today and thought it might solve Toyota's horrible iPod integration. Under the new iOS, there is an option for direct output. Maybe Toyota can take this and do some sort of firmware update to integrate? BMW to Support New 'iPod Out' Feature in iOS 4 - Mac Rumors
All I know is that while my iPhone 4 sounds no different, my wife's iPhone 3G (on EDGE network with T-mobile) sounds better when I use my old BMW iPod/iPhone adapter in the Prius. Don't know why, as both the Prius and BMW connectors look about the same. But the one from my 2008 BMW just sounds clearer with the older iPhone, tested with the same settings and different songs & videos. Just a more crisp & cleaner sound. That doesn't help, but it's just an FYI in case somebody happens to have one laying around.
Although improved audio quality would be nice addition. This post is meant more to address a solution to the horrible user interface for the iPod.
Maybe next generation Prius. I really doubt there will be any firmware update to enable this on the current Prius. It probably requires new hardware on Toyotas anyway. They could probably could do firmware update to fix the most egregious iPod interface problems such as skipping tracks when you try to scroll down a list of songs, but they probably won't bother.
