there are sites around where you can get replacement parts to fix the screen and return it to regular. Harmon Kardon makes an adapter thing that you plug the ipod into that has a screen and control that is meant to use in a car. I think the point of it is that the ipod can be in the glove compartment and you control it with these accessory pieces.

As far as modding the iPod goes, I'm not really sure what you can do without the screen, people have modded them to use full size harddrives or compact flash cards. Someone made a dj mixer thing for last years macmod challenge, check the link on the top of the homepage here.