Replace your FM transmitter? Not a chance.
I know, I know... You read the part about gaining the ability to transmit FM and thought you could FINALLY ditch the annoying 3rd party FM transmitter.
I had a phone that did this a few years ago - the LG Fuziq if I remember correctly. It was gimmicky, hard to use, and most of all, it just didn't work. FM transmitters require a LOT (relatively speaking) of juice to work well and you would drain your battery in less than an hour if not plugged in. Besides that, almost every car coming out has at least an AUX in port and full on iPod integration is getting to be a common feature. Lastly, one of the key examples Apple chose to show us in the 3.0 preview was the ability to control FM transmitters, I just can't see them doing that if they planned in immediately killing the need to do so.
I won't say that I think Apple couldn't advance this technology if they had to, and the iPhone probably has more potential to do this correctly with a more spacious battery than the Fuziq had, but it's just not Apple's style to do something if they can't do it extremely well. My prediction is that Apple will either disable the FM (receiving and transmitting) capabilities or use a version of the chip that doesn't include it.