UPDATE 11 Nov 2010: it turns out I was wrong about it being the simple option, and right about the "at most" part. Thinkflood mentions the simple option themselves in a semi-technical writeup of the technology, but goes on to mention the shortcomings of this approach. Instead, they use a microcontroller to blink the LED, and the audio frequency signals are only for communicating with and powering up the microcontroller. This of course means that while the communication protocol between the software/phone and the Mini hardware can be reverse engineered, the microcontroller will still have propriatary code to drive the LEDs; it looks like reverse engineering this isn't going to be fun, easy, or cheap any more, so I guess this project is out. Old post follows.
I'm excited about this product that claims to turn your iPhone/iPod Touch into a universal remote control.
This takes me back to the old days of my Palm m505 that had built-in IR, and plenty of programs that did the universal remote functionality. Since the iPhone doesn't have built-in IR functionality, ThinkFlood decided to make a "hardware" component that costs $50 and plugs into your headphone jack. There is some free-of-cost software to drive it that has the universal remote functionality.
I use quotes around hardware because my sense is that this is probably nothing more than an IR LED or two connected to a 3.5mm connector. All the smart stuff is clearly done in the software, which generates audio signals to drive the LED.
PS: Here are some relevent links that will help in the hacking.