It is designed to play the iPod like it was any other aux device, so you might be correct. Perhaps it only plays the digital signal from the ipod but I was thinking the Echo Dot is sending an internet digital signal..not really sure.
My home stereo has a USB input labeled input iPod. I want to connect an echo dot to this but that requires a 3.5 mm cable out of the Dot with a USB end to insert into the stereo. Will this cable work USB A male to 3.5mm 4 pole Converter cable?