Tried it on mine (E46 with DICE connector) and it wouldn't work. Sometimes it would play, sometimes it wouldn't, sometimes I'd have to unplug it and fiddle about but I couldn't find the nack of getting it to work every time.
It must be do-able because I got it working a couple of times and the old Dension Ice>Link in my old car would work and feed through FF & RW commands seamlessly.
It's the one big frustration with these ipods and Rockbox - compatibility. Used to love Rockbox to bits, beign able to play flac, drag & drop through Windows but I've had to revert back to Apple's Fisher-Price my first MP3 player interface just because of the car kit.