There will have to be some kind of chip inside the Wadia, as it supposedly has to address the iPod with some kind of coded "greeting" which allows the iPod to output digital. But chips is chips. Personally, I was surprised the Wadia was announced at the price it was. Apple put in that capability for a reason before Wadia ever discovered it. One need's Apple's permission, but Wadia got it, and I imagine others can too.
That said, I too will be interested to read about people's impressions of the Wadia.