I bought a USA SPEC auxiliary input device so I could play the headrest DVD audio through the car speakers without FM modulation. I bought the USA SPEC SVG-707 located here
http://www.discountcarstereo.com/detail.aspx?ID=617. The installation was very easy. It is all plug and play with no cutting or splicing. It gets its power from the harness itself. I mounted it in the console in front of the amp. The build quality was very good and I recommend this product.
I have the 05 touch screen NAV with the factory XM. When you install this device, you press the button with the CD on it (third one down) until RSE (Rear Seat Entertainment) appears. You can mute the front speakers rear speakers or all speakers. What's more is that the kids can access the DVD sound through the RSA controls in the console.
You can hook up an Ipod, playstation or any other audio device through this. It is just like a factory part. The harness comes with an option to hook up two of these but at this time I am not sure how you toggle between the two. I am going to call Monday to find out.