Well I am in a similar position as yourself, and have had similar ideas. In the end, I think that I just wouldn't be happy with the sound quality from a RF Modulator. :-( I've used them a couple times in the past and as much as I really WANTED them to work, there was always a hiss or muffled effect that really annoyed me (sigh). I hear there's a new unit out for the iPod that works better, but still lacks in quality. For my Audi I've used an aux adapter I bought from Blitzsafe (www.blitzsafe.com) which is a pretty awesome unit. It connects to the back of the headunit and gives you a set of RCA inputs into which you can plug any external device. Actually on their website they say there is one for the Xterra in the works... but they haven't responded to my asking when it would be released. My guess is that it will take 6+ months.

In the end, I think I'm going to put my old Pioneer MP7400 (cd & mp3) receiver into the X, then buy an external aux adapter off of ebay (the pioneer unit is about $29), and then have that custom-wired into the dash somewhere. So then when I want to plug my music jukebox into the X, I'll just have to connect a wire to it, a little bit of a manual effort, but worth it in the end.

I have a 10 gig iPod and think it's gotta be one of the best inventions. I've looked at Creative's latest Nomad Zen NX unit (starting at $249 for a 20 gig one) and it seems pretty awesome, but a bit bigger in size than the iPod, and is on backorder everywhere I've looked. The good thing about the iPods is that they work on both Mac and PC, and there is a GLUT of them on the market right now so you can get a 10-20 gig unit for about $300. Also, they're extremely easy and intuitive to use, which is very useful when you're driving and don't want to keep your eyes off the road too much.

Well, good luck, definitely keep me posted as to what you decide to do. I have a feeling we may end up with a similar install.

peace!
H