Hi all,
I'm new here but thought I can shed some light on this subject (playing video w/audio throught D3). I have 3G, unlocked and jailbroken. I found two apps on Cydia that works for me. First one works flawlessly. It's called "Resupported". This app costs $2.99 (i think). Well worth it. The other is free but has lots of settings to tweak with to get it working properly.
I bought Resupported. Plug the D3's ipod cable, select VIDEO at the menu on D3 and it's on,with full audio. Video was played through iPhone's Ipod app. I even get on-screen controls on headunit of basic forward, back