there are plenty of posts about various options on this forum
http://www.bmwlt.com/forums/index.php?
Obviously as you have found, the world moves on, and most contributor are on the left hand side of the pond, so some may not suit.
If you have the connectors onthe back for the remote CD player, I think there ARE ways of controlling an Ipod from the standard radio.
I spent some time looking at options for my LT before deciding on my solution:
- I use a simple cassette adpator thing from Maplin. The cassette lives in the tape drive all the time
- A simple jack plug (from the casette thing) into the ipod
- griffin air click (see picture below). the remote I cracked open and sealed with instant gasket for water proofing, sprayed black and attached to the left handle bar.
Been using it for about 5 years now like that, and it still suits me. I'm no audophile, so I can't tell you wether is a suitably HiFi solution.
Perhaps a bit crude, but it suited me because:
a) cheap

b) means I can choose between the ipod and radio
c) have control of the ipod
d) easily removed and so back to standard, if I want to sell.