I've spoken before of various ways to connect portable audio players to a car's head unit - and I still get a steady trickle of Google hits from that article. There are some interesting developments that I've not mentioned back then, such as the desire of car stereo companies to integrate Flash-based players; Jalopnik ran a piece on a plan to put a USB port in the glovebox, ostensibly to stop the driver fiddling about while in motion, although in practice it will achieve nothing more than have you rummage for memory cards as opposed to CDs. I've actually already seen a head unit, made by some generic Taiwanese outfit - Mustek I think - that had both an SD/MMC slot and a USB port on the front panel itself.
And yet, there is a design that nobody has dared to implement so far. The absolutely most useful way to integrate an iPod into the ICE is to use a sunk dock.
The more diminutive iPods are easily smaller in size than a cassette, and even the fullsize model - including the 5th generation video one - will have no problem fitting inside a 1DIN head unit. Just replace the MC dock, leaving the usage similar: stick the iPod almost all of the way in, having it straddle the lock; then push on the edge to have it pop out. All of them seem to use the same connector spec, so a system of restraints that would enable a single device to deal with all models is simply an engineering task, surely one that requires skill and imagination, but eminently doable. Maybe do a side slot with a USB input for the Shuffle.
The head unit would then take over the iPod, with its own front panel interface, or even integrating with the wheel-mounted controls. (There's a thought: why don't they make the wheel-mount interface standard, so manufacturers can sell all cars with the controls in place and capable of operating any newer head unit?) A scheme like this is excellent for device safety - the iPod is held snugly, and because the stereo itself contains no moving parts, it can be improved tremendously.
I'm sure it will be done sooner or later, probably by the Taiwanese OEMs first and by the big names afterwards, but you heard it here first.
Oh, and this doesn't mean that I like Apple.
4 weeks ago