Or at least the best way you can do it today...
Alpine KCA-420i iPod interface.



Of course, you need a 2004 Alpine head unit, in my case a CDA-9835.
One cable goes from the iPod dock connector to the KCA-420i. An Ai-Net cable goes from the KCA-420i to the head unit. Tags show up on the head unit. Alpine's QuickSearch works fine. So does shuffle play, whether in a playlist or the whole iPod. iPod need not be in view at all; full control from the head unit. This is a good thing, since the iPod click wheel isn't easy to use while driving and the head unit is a heck of a lot easier to read than the iPod screen.
I thought it was nice to be carrying around 4500 of my favorite tunes in my pocket (and room for 1000 more on my 40G iPod). I can't wait for springtime to roll around and drive the roadster with the same in the car with no clutter, and still be able to take my tunes with me. I think I'll fab a composite housing so I can just 'dock' the iPod in the car somewhere (no loose cable). In the interim I'll just put it in my driver's side cargo net.
KCA-420i is probably going to go on a custom-made kevlar knee bolster (replacing the stock one I removed last summer).