Re-posting my XDA forum thread here by request.  Thank you, head-fi.org for all the great info I got to help me get to this point!!!
It's because of you guys that I discovered DAC's and put this together.
 
 
EDIT:  I haven't yet figured out how to do HTML tags here to make the [bold] and [images] work here.  
EDIT #2:  Okay I think I got that straightened out.  Pics & etc. should show up better now.
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So, you're like me and you want to use your North American Galaxy S3 with your car stereo to stream Pandora, play MP3's and listen to your phones Navigation directions.
 
But, Bluetooth obviously sucks for so many reasons.
And the USB analog audio output has too many clicks/clacks and otherwise degraded sound.
 
So what do you do?  You're an audiophile (or a wanna-be like me) and NEED better, cleaner sound!  
Well, here is how you can get near audiophile quality sound from your GS3 to your car stereo.
 
 
1) Purchase an external USB DAC (digital to audio converter).  This takes your phone's digital audio and cleanly converts it to analog audio for your car stereo to handle.  
So why don't we just use the phone's internal DAC?  Well, because it's a cheapy, crappy sounding Yamaha DAC.  Samsung cheaped out on us!  So we're using a BETTER DAC instead.
 
I bought the Behringer UCA202 USB DAC for just $30 shipped.
http://www.ebay.com/itm/160904879602?ssPageName=STRK:MEWNX:IT&_trksid=p3984.m1439.l2649
 
 
2) Now you need to get the digital audio out of your phone and into the external DAC!  And you also need to make sure your phone still charges!  So I bought this USB-OTG cable that has a charging adapter.  It's just $10 shipped:
http://www.ebay.com/itm/160912100776?ssPageName=STRK:MEWNX:IT&_trksid=p3984.m1439.l2649
 
 
3) And then you need a dual-RCA to 3.5mm cable to get the analog audio from the DAC into the Car Stereo!  I used one similar to this $3 shipped one:
http://www.ebay.com/itm/5-FT-3-5mm-Male-Plug-to-2-RCA-Male-Stereo-Audio-Cable-/180711669936?pt=US_Audio_Cables_Adapters&hash=item2a134140b0
 
 
 
And so what are the results you ask?
 
HOLY MOLY!
Not only is the audio quality MUCH improved, but the sound is so CLEAN now.  No clicks, burps, or any other weird background noises.  Just straight CD quality background silence.  
Even my GPS voice sounds prettier.  hahah
Bass is tighter and deeper.  Highs are more revealing.  Everything is so much better that a novice could tell it sounds better.
 
And yes, GPS navigation works perfectly.  If I'm listening to Pandora or an MP3 and my GPS needs to talk, then my music will go several db quieter and GPS will speak up, then afterwards the music will automatically go back to full volume.
 
Also, one thing I hated about Bluetooth was everytime I turned my car off for just a minute, when I would power it back on the Bluetooth would not consistently reconnect.  Well, this USB-OTG has been very consistent for me so far.  Music just picks back up where it left off at and is fairly quick to do so.   
 
Cons?  Well, I haven't tested hands free calling yet.  But I'm told it doesn't work with this USB-OTG to DAC configuration.  Maybe there is a bluetooth solution for that.  I dunno?  And AOSP does not yet support DACs.
 
Pros? Freakin everything.
 
Pics are below.
 
 
Here is the DAC and the USB-OTG cable:

 

 
This is how you configure the DAC.  
You can probably also use the headphones output instead of the stereo RCA, but I didn't try it.

 

 
I wired up my USB-OTG cable to my iBOLT dock.  It comes up through my dash defrost vents.

 

 
This is what the three connectors on the USB-OTG cable look like:

 

 
Here is the DAC being wired up.  I taped up the non-used RCA's to prevent anything bugging with them.

 

 
I wrapped up the DAC with DUCT tape.
Not sure how or why the pic is sideways.  It looks normal on my desktop.

 

 
Hid it behind my dash.

 

 
Here is the USB-OTG cable with my iBOLT dock.

 

 
The car stereo w/audio cable attached.  Some car stereos have the 3.5mm connector in the back.  Or a dual-RCA input.  I'd prefer one of those to have a cleaner install.   Maybe someday I'll upgrade my car stereo.

 

 
And here is the finished product.  My S3 docked, charging and outputing beautiful digital music!

 

 
 
 
LINKS:
 
How to make your own USB-OTG cable with power:
http://forum.xda-developers.com/showthread.php?t=1828032
 
List of compatible DACs:
http://www.head-fi.org/t/595071/android-phones-and-usb-dacs/300#post_8700170
 
The official Galaxy S3 sound quality thread (TONS of info!!!):
http://forum.xda-developers.com/showthread.php?t=1633685&page=2

Thanks!

Holy cow I like this a lot.  Thanks for sharing it.

Nice work, I'd never do something like this though.  I go through phones more than I do cars!

looks awesome, does the phone charge while accessing usb audio out at the same time?

Looks like it.
 
Anyone know what app that is in the last screenshot?

Looks a lot like Car Home Ultra
 
https://play.google.com/store/apps/details?id=spinninghead.carhome&hl=en

Hi Guys I have just ordered a new car a Skoda Octavia it's a company car and I have gone for the sound upgrade which costs about €600 it's made by Canton. It wont be anything like I have at home but I'm sure it will be respectable. I will purchase a Fiio x5 when they come out and how I would love to play flac in my car through the usb all I know is the there is a fibre optic cable at the back of the head unit. I can't find any info on it. Will there be a way of connecting this dap to my car. For 5 years I have been waiting for manufactures to support other formats not just mp3 and wma. Any ideas