I like the idea of digital out very much, but I don't like my iPod reduced to a Shuffle.Neither would I and I am glad it is not.
I don't know if you are talking about an external screen, but I can navigate my iPod while docked on the iTransport just as I can undocked. To say it clearer, so far I can navigate and view everything on the iPod's screen absolutely the same, whether docked or undocked.
If I misinterpreted your comments, I apologize.