Ok I have been mulling this over for the last 2 days or so. I just got a avic-d3 installed in my car with the ipod direct cable. Everything works great except that I have an Iphone and the video does not work.
With the software update to Iphone 1.1.1, video out now works with the "apple AV composit cable". This cable comes with 3 RCA plugs (video, left, right) and an USB. How about plugging the rca plugs into the AV1 plugs of the main pioneer head unit harness and the USB into the optional USB kit?
With this setup you should be able to control your ipod stuff with the usb interface