Inspired by this thread (and especially by @dkaile) I finally took the plunge. Bought USA-SPEC PA15-TOY from Amazon. At current price of $125 and conversion rate, it would have been possible to procure a new head unit that can play CD/USB/AUX and even perhaps provide iPod connectivity. However, wanted to preserve the OEM look & feel. Shipped to a friend in US, and another friend brought it back. Here is the package opened up:
As already noted in the thread, the installation is a few minutes job. Actually you do not need to unscrew the car stereo unit also. Once the front panel opened up, you can take your hand back to the stereo, feel the free slot and connect the corresponding connector. Attached the PA15-TOY using double sided 3M tape on an inside surface next to the glove box.
Only task remained is how to bring the cable back to the cabin, so that the iPod is easily accessible (in case need to press a button), safe (out of sight) and is not a hazard (not dangling near the controls).
Since I have an old generation iPod Nano, a brainwave struck! We never use the ash tray (quit smoking long ago), and the size is probably right to accommodate one. So brought the cables in through the ash tray slot. Because of the bulge of the cable on one side, had to file the hole on the metal flap a bit bigger. Now I have iPod (and an additional aux cable, just in case) in the tray:
Looking closer:
My estimation was almost correct. There is just enough space to fit the iPod (obviously wouldn't have been possible with even older iPod or iPod touch though) and the aux cable in the tray. Need to be a little careful to fold/wrap everything in that tight place, but that's a rare exercise. Unless new songs to be downloaded or playlists to be modified, it can stay inside:
Still then, because of the inflexibility of the PA15-TOY's cable, it doesn't fold really sharply, and the tray is not 100% shut. Well it is good enough, just a little bit of cable is visible. I have not tried hard, but I believe one these days with a little bit of wiggling I can securely shut the ash tray:
It is working as expected. Playlists, ID3 tags, steering controls, pause when ignition off, everything just work flawlessly. I have several high-bit rate MP3 in the iPod and they sound really really good
(PS. Please forgive picture quality - taken by phone camera)