Yes the AUX is great, don’t use the IPhone so much for music now though, as I find it annoying no control at head unit. Happy just using the CD changer. Never thought of using it for the Nav audio though- that’s a real good idea!

No firmware update doable, you have to buy the correct BM53 unit unfortunately.

To add a tv tuner you will have to mod your existing analogue tv unit with a digital receiver. U can get them from China cheap online but make sure it’s correct frequency for your area.
An input for reverse camera can be added at same time.
There is info on this out on the net, doable if your handy with electronics, or there are companies out there that you can send your analogue tv unit to for modification.

I gave up on the idea of getting the tv and factory nav working, not worth the $$$, and my X5 is a Japanese import so the Ariel receivers etc. are different to rest of the world.
I use my IPhone for Nav.

One of them Dynavin head units would do everything you asked about, but not sure about them units.

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2003 E53 3.0
2001 E46 330ci Msport
2001 E46 325i Touring wagon