Steering controls work fine with this setup. I was able to forward to the next song. Also able to use the radio controls to navigate the iPhone song/album list.
The iPhone is still directly connected to the BMW splitter cable, and the MS-2 only goes inline in the AUX line, so the car is completely unaware of the addition.
Sound-wise, it really lifts the soundstage and improves the high-end quite a bit. It takes a lot of repeated attempts to get a good tuning, though. It's not exactly audiophile-quality, but for the car, it's OK. If you have $2000, then, yeah, upgrade the amp and speakers, but this was $40.