There's absolutely no reason why an iPod shouldn't port perfect digital OUT, which Wadia realized when they made this unit:
Connecting BL5s to the analog minijack out of an iPod is silly, since you'd then be using the DAC in the iPod.
soundproof, nice gadget... i'm looking for a ipod dock with a good d/a converter inside to connect it to my vintage beolab 5000 (1967). what about the pro-ject ipod dock? http://www.box-designs.com/main.php?prod=dockboxf&cat=boxes&lang=en
best regards
dario