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I get the same message and I respond by clicking on "NO". It works fine with bluetooth and audio.... It will not charge the iphone until I connect the convertor...
I have a 2010 model and just ran down to check, with the Y cable. The iphone 3gs play music, bluetooth works and charge too. As the message, it appear and I just hit "No" or doing nothing. The message will go away and into the default mode. (NO airplane mode)
So basically it is plug and play. Hope it helps.