Yes, using the headphone out would be a downgrade for most of us, but lets take a step back - after a night's sleep I feel a bit more objective about this.
1. If Joe Public has to buy a cheap mini analog cable to get his dock or whatever working with one of the new iDevices, I'm guessing many will see it as a minor annoyance, and I'm sure the guy at the Apple Store will have one handy ....... of course, good luck controlling playback from the dock's remote control. Still, that's what Shuffle is for, right ? Set and forget.
Another issue is whether you would be able to sit your iDevice in your dock with the adapter fitted - the Engadget-style sites are recommending you buy the more expensive 'cable' version of the adapter for legacy docks - that puts your iDevice back on the bench or lying on its side in one of the larger dock cradles. Clearly, it wont be ideal for many people.
2. As Ken from ALO said in the other thread, its become clearer that the Classic is the last of the 'audio devices' with an Apple brand on it - how many iPhone/iTouch users buy them primarily to listen to music ? We are a niche within a niche at Head-Fi. Buy a Classic and look after the thing - it will probably still be with you when the iPhone 5 is consigned to landfills all over the world,
3. If there IS a DAC in the adapter, I don't envy Apple Helpdesk (or their colleagues at the dock makers) when something goes wrong with that sub $30 concoction - telling customers they need to buy a new adapter from Apple because it 'might be a problem with the DAC' isnt my idea of a good time. I would also venture that the result from such a DAC would have to be comparable to the sound from the headphone out - you now have a phone with two DAC chips which may or may not be identical. Last time I checked, there was a little more involved in digital to analog conversion than inserting a sliver of silicon into moulded plastic. The EU adapter illustrates just how little real estate Apple's engineers would have to work with -
Even if the end result is reasonable from a dock, is it really going to be a signal you want to amplify ? I guess we'll know when someone actually buys one and reports back.
Having read 'iPod Out is not line-out' counter-claims several times in this thread, I need to point out that Apple could have allayed a mountain of fear and loathing with a 10 second demonstration of the new iPhone hooked up to a dock in the keynote, but I suspect that they have learnt their lesson with embarrassing snafus during a product launch. The media will inevitably pick up a glitch and broadcast it over several news cycles, ignoring the 99% that went seamlessly.
End of the day, the vast majority of people lining up outside Apple Stores wont give a hoot about something as obscure as 'analog line-out', just as I dont give a hoot about being able to access 4G services here in Oz. Horses for courses.