Sorry for the delay replying... I eventually went for the Dension ICE link FM (modulator). This was wired directly into the aerial cable and basically 'hijacks' an unused station. The result is amazing, you honestly wouldn't know the difference. The FM stations still work while the iPod id in its cradle, and when you press play it simply goes.
One thing to watch though is you don't get a mounting bracket with the Dension, I ordered a custom one at dashmount.com.... another very good company are brodit.