I understand that the iPod does not output anything other than 16/44.  So one way around that is to play your hi-res files from your computer into the stereo, via the appropriate (built-in or external) DAC.

I used to use an iPod Classic with a Wadia 171 iTransport to a Bryston BDA1 DAC, and it sounded great with Apple Lossless files.  Now I use it a work with a Benchmark DAC1 and headphones.