My family uses their iPods with my BS3 via a Griffen iTrip (a small FM transmitter that plugs into an iPod).
I got tired of fighting format and content problems with the SD card (the wife and kids can load music onto their ipods without my help - they needed my help to load SD cards - especially if they were starting with an ACC). It works great. The BS3 has a nice flat top so they can lay their iPod on top of it while it is playing. However, the iTrip must be pretty close to the BS3 or else the music gets staticy.
Being that I am a BS2 hold out, I still have my SD cards that I use interchangably between the BS2 and BS3.
I've never looked at FM transmitters that could be hooked up to an audio master... my guess is that their range would be quite limited - it might work in the same room, but, like the iTrip, the performance would probably fall off quite rapidly.
Stan