Ipod Dock with direct out?????

"They actually re-clock the digital signal so that they reduce jitter to almost zero."
I'm not too conversant with this topic, but I would have thought that jitter wasn't really an issue with music file playback (such as mp3, AAC, lossless etc) since the file is read and bufferred by the playback device (PC or iPod), as opposed to a disc which has to read and play the data on the fly.
Any jitter will have come from the original rip and is now part of the file, unable to be removed. Am I wrong?

Are we talking lossless files on the iPod? Because if not, I really don't see the merit of spending all this time, effort and money on a compressed signal in the first place.
Given the underlying purpose of iPods (portable audio), why do so many want to use them as home audio, instead of a PC or CD player? Surely even a good universal player (eg Denon etc) would do a better job playing mp3 discs than an iPod?
PS. These are serious questions, I'm not trying to be smart; I really don't get the aftermarket high-end iPod accessory thing.

Well there you are... I had no idea the iPod could actually output digital and bypass it's own DAC.
I have much to learn!
I gather then the iPod's internal DAC is fairly ordinary?

I must be missing something. This all seems like an awful lot of money and trouble to end up with something that a good music server could do for a lot less money.
Just for example, what can a Wadia plus iPod do that, say, a Cambridge 740H server (250GB, MP3, FLAC, WAV, 3x Wolfsen DAC's, WiFi etc) can't?
Sure the iPod is portable, but not when you add the Wadia dock, amp & speakers and so on.

"Why does it no longer become portable? You just pull it off the iTransport, plug in your headphones and away you go!"
I realise that - I have a Nano for portable listening at work etc, where sound quality isn't critical.
I suppose you only have to rip everything once if you use the iPod for portable and home listening, but some of the comments above make it sound like a lot of headaches to get it right.
That's why a music server that can rip and burn CD's, store heaps on it's HDD, play various file formats and link wirelessly to your computer sounds so convenient to my not-so-informed mind.
But at the end of the day it comes down to personal choice; I still like CD's at home with their little booklets!

Brian, I think we have our wires crossed. The CD-PC-Ipod chain is the easy bit.
My comments about the "headaches" are more referring to the subsequent use of the iPod as a high grade source by spending $$$ on devices like the Wadia, which it seems isn't even fully compatible with more recent iPods and has questionable build quality (ref Uclaid's comments).
All that said, this isn't an area I know a lot about, but am certainly interested in.