Tried this method and got the bypass working! The trickiest part for me was programming the TR7. Took me a few hundred tries (exaggerating) before I called PAC tech support. They told me to try using a pushbutton switch to pulse the brown wire and it made things so much easier!
Anyway, as per your post, it takes a little while for the bypass to kick in after you start the car. That being said, while the bypass works well initially I have had problems switching between modes (ipod, radio) and then getting back to appmode. I'm able to get to hit the app button but then all I get is a black s