extra_action
A very cool approach! and lots of work.
I wonder if you are still using the headphone jack on the ipod instead of the line out on the dock. from my experience the line out is not amplified therefore doesn't distort when driven. maybe your gear somehow neutralizes that?
my experience is with the same 3G ipod, except in my car system.
(btw: cool apt from your other pics of LR. sorta looks like SF.)