I've more less done the same thing in my car, different location though.
In the pocket of my radio dashkit I fabricated a channel to slide my iPod into, where the dock connector for my Alpine interface is attached to the back of the pocket. I grinded off the locking teeth from the connector, so I don't have to squeeze the sides of the plug to disconnect it.
Controling the iPod with your steering wheel controls isn't a big deal. It'* just a matter of selecting an aftermarket HU that either supports the use of a wireless infrared remote, or has a hardwired remote mini-jack connector on the back along with supporting the use of a dedicated iPod interface. The best interface on the market right now is the 2006 line of Alpine decks featuring the Full Speed iPod option. It by far has the most intuitive and responsive interface, along with being the cheapest route of accomplishing what you want to do.
So I'd suggest looking into buying
Alpine CDA-9856 or CDA-9857 headunits (but only the 9857 includes the wireless remote control, you'd have to purchase it seperately for the other one)
Alpine KCA-422i iPod dock cable
PAC SWI-X steering wheel control interface
then use your imagination on how to mount the dock cable in the location you desire