If I'm correct, the iPod should work fine. it has its' own source of power, turning the hard disk. All that is sent across the USB is the signal of the music being played on the iPod. The iPod has the ability to send its music through the port where it is charged from.
The only catch would be if the Kenwood's software gets confused because of the iPods own software. I don't know how it reacts to that.
And the Kenwood USB port can handle any size hard drive given that the hard drive has its' own power source, but will only load roughly 16 gigs of it due to files allowed to be loaded. It isn't determined by filesize, but amount of total files. Weird, but it has been tested. Just make sure that the drive is formatted in FAT32.