I just got my 2006 MCS today with oem mini ipod adapter. So far it's working pretty good with my mini ipod. There's a 2 second delay when you hit next track before it actually goes to the next track.
I didn't have my playlist set up as MINI1,MINI2 yet but I was able to use selection 6 which is play all.
Also you can unplug the mini ipod, manually select any song,playlist you want and plug it back in. It will continue playing where it left off in the car as selection 7.
When you connect the ipod, it display a big MINI word which was nice.

Also reading the manual of ipod adapter says it will continue to charge for a maximum of 30 minutes after the car is turned off. So I think it's safe to leave it in the car for long term. I will check if it really does stop charging and turn off the ipod later.

So far it's a pretty good adapter. The only bad things are no ID3 tag display and MINI# playlist naming convention. You can name the playlist 'MINI2 - Britney' as long as the first part has MINI#.

 

There should not be any delay, you have something screwey, probably on the ipod end. Yes it really does turn off, just like the fridge light