Without revealing who I work for, we are currently prototyping this approach.
My most recent install was in a 2007 530xi.
The system is essentially an intel based pc with a dvd drive, usb connectivity, 300Gb dark drive, nav, am,fm, streaming audio via pandora, yahoo search capability, one shot voice recognition, etc. It uses a standard monitor in the dash and is controlled via the steering wheel controls and the I drive controller from an M6, both on the CAN bus.
Connectivity is optic direct from the pc to the L7 amp. This is the only connection between the pc and the OEM sound system at a signal level.