iPod Car Stereo Compatibility Questions from a Giant N00b

Sorry for the banality of these questions, but although I'm a big home A/V dork and an audiophile, I'm totally new to car audio and all things iPod (just got one for Christmas). I've been trying to figure out the answer to the following question, and I haven't been able to find it anywhere:


If I'm going to install a new head-end in my car to dock the iPod directly to, does that head end need to be able to decode the format I store my music in on the iPod, or will the iPod decode it before outputting?


I'm not talking about connecting via the headphone jack, but the port on the bottom. Specifically, all of my music is currently stored in Apple Lossless, but I have yet to see a deck that actually decodes the format. Obviously, if the iPod decodes the audio itself and outputs bitstream or analog PCM over the connector, that's not a big deal


Also, I'm looking at the following decks:


the Dual XHD7714 and the Alpine CDA-9884



I know Dual is not known for exceptional quality and Alpine is generally highly regarded, but I'm very interested in HD Radio and the bluetooth compatibility in the Dual is also a plus. With the Alpine (as with most decks, apparently), I'd have to buy a bluetooth adapter and HD Radio tuner separately. I noticed that there's a pretty big difference in the SNR on the units (80 for the dual vs. 105 for the Alpine) so I'm guessing there's a sound quality difference... can anyone enlighten me as to whether the potential quality difference is a big enough deal to override the obviously superior feature set? (I'll just be hooking it up to my Chrysler 300M Special's stock system, and it's good as stock systems go, but that makes it not very good in the big picture.)


Sorry to ramble. Any insight into any of my questions would be a big help. Thanks.


Dan