iTunes probably is too small for the 7" touchscreen. Try to find something that's meant for an automotive application, I don't know of any Mac software for this purpose but I'm sure it's not hard to find.
As far as the volume changing, you'd do it like you'd normally do it on the computer. As a guide you can set the volume on the computer to the half-way point, then adjust the amps gain till it's a good level. Then you've got some headroom if you want to make the music louder by just adjusting it on the computer.