I don't know about the headphone jack as a quasi video output. You could, in theory, sample the video and create an audio stream that was an encoded version of the video (though I suspect resolution, frame rate and color accuracy would all suffer to the point that it was noticeable on the large screens).
The bit that makes it suspect to me is that the iPad already has a VGA output, and even then standard iPhone/iPod Touch has had a composite video output available via the dock connector forever. Since this hack is more about hardware than software, why would you create your own video encoding stack to use the headphone jack instead of just taking the video that already comes out the dock connector?
In order for this to work, the piece that goes next to the screens would have to output a signal that was stronger than the signal actually being fed to the screens to cause the internal circuitry to lock onto the new signal. Seems unlikely to happen in a device that appears to be powered by watch batteries.
I think that something like this is theoretically possible, but requires much different/larger hardware than what is shown in the videos. I'd be happy to be proven wrong though.