A car pc will simply output the software interface directly on your 16:9 unit. There are a few points you can tap into from that, from the OEM navigation output with RGsB, to the NTSC composite signal on video aux or even reverse camera. As about the DSP, the car pc won't need to defeat it or bypass it, it will fit on the existing audio system. Same goes for controls too, since you tap into the ibus, you can read any button press, both on your steering wheel and your head unit.
I played for a while with a Dynavin on an E46 and as bimmer passionate, I could not fully digest its look and pretend it looks close to OEM, even if it correctly replaces the OEM unit size. But maybe somebody not used with E46 would never suspect the unit is aftermarket stuff. Also, the interface felt quite clumsy, scrolling through a heavy iGo map was a challenge for the poor CPU, etc.
If I had the 16:9 unit, I would rather get car pc for a full solution, or one of those Grom usb boxes if wanted MP3, or some Ampire if I wanted videos. If I had the MID, I would rather go for something like Avic.