If the MDI connection is like other iPod connections, it should offer a digital output from the iPod to the head unit's DAC.
I find most USB thumb drives only offer MP3/WMA compatibility, maybe WAV. But I use AIFF on my iPod/iPhone and it is noticeably better quality than MP3/WMA. So for me, the iPod connectivity is important.
BTW does anyone know if the MDI/iPod cable disables the UI of the iPod ie you have to control the playlist etc using the RCD or can you still use the iPod to navigate
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