OK, well, I just tried my iPhone headphones in a 2G touch and it forwards and mutes the music just like it does in my iPhone in case anyone was interested. It doesn't do it in my 1G Touch though.
Wirelessly posted (Mozilla/5.0 (iPod; U; CPU iPhone OS 2_1_1 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5F138 Safari/525.20)
it also works with 3rd party products as well which are iPhone compatible.