For one thing, I have an iPhone, and I have a car with Microsoft Sync. Every time I plug the iPhone into the car's USB port, it pops up "this accessory is not made to work with iPhone". And then it works anyway (except for the part where something is a little overzealous about reindexing the music on the phone, and I'm not yet sure which side that one's on).
For another, the DRM point may be more important than the author makes it out to be: there are plenty of systems where using the "wrong" cable will still work, but with significantly degraded access (I still remember the first time I had to buy an adapter box to use a DVD player with my TV). I'm not sure that "sorry, you can't do that" is any better or worse than "you can do that, it just won't be useful in any way".
The author can assure you the video halts while the iPod displays that dialog ("monologue" would perhaps be more appropriate) box saying the cable is not compatible. It usually does so after a random period of time (between a couple seconds to a couple minutes) playing the video on the TV. Any subsequent attempt to play the video with the same cable results in the video being shown on the iPod screen. One workaround is to reboot the iPod and restart playback, but it is more hassle than I am willing to put up with.