Think of it as another headphone out... the difference being it shouldn't respond to the iPhone's volume setting (I don't have mine connected at the moment, so I can't test if it does or not, but a true line-level output should have no level adjustment on it)
You would likely use it as an easy, semi-permanent connection to a stereo system while you're docked.
One thing worth noting: there is no recessed jack on the line out, so normal headphones and cables work without an adapter...
I bought a universal cable, 30 in dock to line level rca audio outputs and when i hook t up to the iPhone, no audio comes out ofthe rcas. I tested my brothers 50 dollar cable, the one that has the video out as well and that one works, it mutes the internal iPhone speaker and sends the audio out.