Ok, last post here for a bit as all is working now... I didn't have "copy files to iTunes" enabled 'cause I have never needed to use it in that manner... Now it works. Despite the no info displayed on your head unit by the music link thing, I LOVE the solution provided. It is fast (alpine setup was slow, scrolling was super slow, etc although they have progressed recently), lets you select "random" on whatever playlist you want to hear (which is announced by voice, kinda nifty), and you basically get iPod integration. For what it is worth, it is a pretty clean look as you don't have any external display, etc.
BUT my above question about the audio quality still remains... I think the highs are clipped somehow. In some songs specifically with drum/cymbal intros, etc., it seems like something is missing. When I switch from CDC (ipod) to FM on a side note, the volume is a bit off between the two items. CDC is definitely lower than any other source. Anyone else have any input on this?