I followed this video exactly and my bypass works. I can watch videos from my iPhone 4 ('tv out' on some apps isn't active on the iPhone 3GS), netflix and slingplayer mobile (haven't tested youtube) WHILE the car is driving.
I do have my VSS wire connected, so even if that senses you're moving, it's irrelevant to the bypass.
Furthermore, even though the mute is grounded, mute works just fine when using the radio and I have full use of bluetooth phone calls