No, he's talking about actually installing the program on the iPod, not using it as his media drive.
Can't do that. It won't let you install it on a drive that isn't a system drive.
Once upon a time (vers 1, 1.2, 2 maybe) you could have moved the executable over and it would have worked, but Final Cut now relies on too many frameworks that are installed all over your system drive during install.