The BMW OEM Ipod kit uses the Aux port on the radio system. You keep the disc changer. However you can only control the iPod manually and will need a separate charger for it too. If you're going down the DICE route, then why do you need to keep the changer as your music will be on the iPod? Just asking. I have the older ICE>Link Plus on mine and don't miss the changer at all. I am now looking at the DICE system as an update.
I also have the tele handset in the armrest. I think to change to a full Bluetooth system you need to change the Telephone Control Unit (TCU) to one that supports Bluetooth and pairing with separate handsets. There was an issue with BMW in the UK only supporting certain versions of Bluetooth and the Address Book version (I think it was limited to Ver 1.1). This severely limited the phones that would pair and then work properly (address book visible on Nav screen). Have a look at
BMW UK: Owner area - Bluetooth for answers as it used to hold a list of what worked with the 'X'. With the E53 being on 'old' model, the data may have been pulled off the site by now, but..... I ended up specifying the in car unit for mine and just put my sim card in as needed. Shame really as it's not the most 'elegant' solution but at least I know it works.