the following is to the best of my knowledge, but might well be wrong, so please don't blame me...
Question 1: Is this drawing correct? (I know I could route the wires better)
Looks okay to me.
Question 2: What would the R and C values be?
R you don't need (i.e. connect to ground directly).
C is to suppress spikes and should probably be as close to the IC as possible. Personally I would put it where you drew it though (or even omit it). I guess a value of 47nF would be fine.
Question 3: Are there better (more convenient) grounding points?
I couldn't really find any - possibly the battery connector as it is on the same board and close by.
Question 4: Would any software modification be necessary or is this a 100% pure HW mod?
With just the hardware mod, the player would charge, but be connected in USB mode.
If you want to charge while playing music, you need a software mod as well. It should be straight forward (e.g. enable the defines HAVE_USB_POWER, USBPOWER_BTN_IGNORE and USBPOWER_BUTTON in the right places). I have a patch for that for you if you want.
Question 5: Where can I purchase the worlds tiniest soldering iron?
My approach will probably be:
1) get thin stranded wire
2) remove about 3mm insulation
3) cut all but one strand back to 2mm
4) cover expose strands in solder
5) place in such a way that the 1execess strand is above the pin
6) fixate wire with glue to hold it in place and provide strain relieve
7) carefully dip a soldering iron on the single strand above the pin
hope it only connects to the one pin it is supposed to connect to
but maybe you have a better idea?
This is the minimal mod. Variations would be:
- connect pin 7 to UCC (3.3V) instead of GND to enable charging with 500mA. Strictly speaking USB needs to negotioate with the host if it can supply 500mA, but most USB ports will provide it by default and I believe other targets do it
- connect pin 7 to a GPO pin of the CPU to switch between charging modes by software. This would obviously require a patch to be able to switch between the modes.