Getting certification for the dock is both onerous and expensive since it requires Apple approval and a license fee for every device. The audio jack is open so anyone can build on top of it.

Regarding question 1: DAC on the controller, ADC on the iPad

Regarding question 2: I'm unsure, but I couldn't imagine this being an issue. Very clever, pretty cool!

Thanks for sharing this ricardobeat

Presumably you may want to use the dock connector for charging.