GOOD NEWS!!
I received my replacement IC board (officially called 'Apple IC Authentication Chip') for the PXMAG gateway from iSimple today. Got it next day in ground shipping since they are only a few hours from me. Boxed well, nice instruction sheet.
Bottom line -- very easy to install. Took 5 min or less once I had the unit pulled from the car to put the new board in. Total installation time for me was about 10-15 min.
Verdict -- Works Great!
It actually works better than before. The compatibility messages are gone! Functions initially seem exactly the same. I use mine with the AUX1 option and control everything from the iphone. No firmware update is needed if you're already running version .38 (the latest release). Maybe they'll release a new firmware soon, but I don't see any problems so far. I played music for a few minutes without interruption. I'll know for sure on my commute tomorrow.
I know the thing costs $30 and it's a bitch that it just didn't work before (only had my unit for a few months now), but I do have to hand it to PAC Audio for getting a fix out this quickly. Could have been waiting months for it. Good job.