x2. The limit actually limits the output to the headphones. If connecting thru the data connector, than the volume on the iPod doesn’t matter. Also some aftermarket radios have a source adjustment. Make sure it is set accordingly.
I have to disagree on your above statements. If you are a true ‘audiophile’, you may hear a difference in the sound quality due to the compression. The rest of the world ain’t gonna hear much difference. I have spent 20+ years in the car audio business & my iPod sounds pretty damn good in my vehicles with a direct input. My truck has a pretty healthy system & the iPod sounds great at high volumes. I have the direct interface with my Jeep OEM Infinity system & it sounds as good as a cd.