Well, you are reducing the overall capacitance on the RC circuit. Caps in the iMod cable are there to filter out the DC voltage, but the side effect is it will also filter out the low frequency too (bass cutoff). To avoid the problem, we use large value caps (the larger the better). If I am not mistaken, most iMod cable uses either 22 or 47uF BlackGate - however, since normal iPod already has caps on the lineout (minimum is generally 1uF, but let assume it is bigger. Value around 22 or 100uF are actually not uncommon). Once you link two cap in series, their total capacitance actually decrease (1/TC = 1/C1 + 1/C2). so the new value is much less (if both are 22uF, then the value is 11; if iPod's is 100uF, then you got 16uF or so; if iPod is on minimum 1uF, then you get 0.96 total ). All these mean are you are cutting off more lower frequency range (though you might not be able to hear it).
Also, all caps introduce its own distortion and coloration to the signal path. Using iMod cable on normal iPod is nothing less of doing a mechanical EQ (or worst).
Some people actually like how iMod cable colors the normal iPod's sound - but from a pure technical point, I don't see how that can be beneficial to the final sound quality.