No, you CANNOT connect an iPod to the Duo’s 3.5mm AUX Jack and have music come out of the Bose SoundDock. The 3.5mm AUX jack of the CoolStream Duo only supports audio out. Music (or any audio) can only go into the CoolStream Duo through Bluetooth. Music can come out either through the 30 Pin Connector or through the 3.5mm AUX Jack.
You can use the Duo’s 3.5mm AUX Jack to connect it to a speaker that does not have an iPod connector or to a pair of wired headphones. By connecting the Duo to these devices they now become a Bluetooth speaker or Bluetooth headphones.