One pet peeve of mine is that the iPod is talked of in a negative light, such as, "an iPod is not going to compete with a nice in home CD", this I do not agree with, nor due a number of reviewers.
The question concerned use of iPod in a car, that typically implies that the on board DAC of the iPod is what will be listened to. For that reason it will not be equal to a good home CD player with better DAC.
You basically posted the same thing when you wrote
Most are aware of the Wadia iTransport which bypasses the DAC within the iPod, making the iPod a hard drive based source.