That'd be a good option, too. The goal would be a setup that only has one DA conversion in the chain, and your suggestion of a USB-HDD capable headunit plus a HDD or flash drive would accomplish just that.
I haven't used such a system, mind you, but I imagine that loading up said hard drive with music, making playlists, and navigating to them afterwards would be somewhat difficult since it'd clearly be outside of the iTunes ecosystem. Call mecrazy lazy, but it's awfully easy to sync up playlists to an iDevice (like my omnipresent iPhone 4) using iTunes…
I haven't used such a system, mind you, but I imagine that loading up said hard drive with music, making playlists, and navigating to them afterwards would be somewhat difficult since it'd clearly be outside of the iTunes ecosystem. Call me