That's awesome. I could totally see that being a miracle in the field when main equipment goes down. I've heard some interviews done in the field with just a straight iPhone 4, and provided they were in a good, quiet setting, the audio is crystal clear and really pleasant sounding. I can only imagine it would be better with a higher quality mic with more directionality.
It looks like it's just going to break your jack the way it's mounted. The sound is not even much better than standard audio looking at the video of it. Also, you could just use a adapter cable and plug in a proper mic if you really wanted good audio.
These stories are interesting from the perspective of what is possible with an iPhone camera rig. But, if you are serious about video, splurge and buy a real rig, with a real camera sensor, real lens and a real microphone setup.
There are so many mics out there that will work with the iPhone, like the Sony ECMMS907, for example. And with Apple making the 5 different than it's predecessors, who knows if this would even work on it... There's a lot to be said for universal standards.