I have the IceLink Plus in my '03 X5. I have never had any issues with the vehicle battery. Note that the IceLink Plus setup menu gives you several options for charging the IPod battery - I left it on the factory option. See the IceLink user manual for more details.

All my music is encoded with the Windows media player, not ITunes (not all the players in the family are IPods). I use WMP for everything except synching the IPod. My files are all at 192 kbps, and to my ears, the files sound as good as it is going to get with a car stereo. Others may have better ears. I can hear a difference at 128 kbps, but not at 192 or greater. YMMV.

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2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue