Confirmed by Ars Technica, a programming class in the iPhone SDK known as MPTVOutWindow does essentially what its name implies: it sends video out through the Dock Connector port to an outside source, such as an external screen.
The adaptation is primarily meant for movies but allows any program to export the current contents of the screen, theoretically allowing apps intended for screens larger than the 3.5-inch iPhone LCD.
After testing, however, well-known iPhone developer Erica Sadun notes that touch input is disabled in this mode with current implementations and so prevents using the iPhone as a regular controller for games or presentations. It does recognize accelerometer input for a basic level of control.
The code writer also observes that the programming call appears designed for the phone's landscape view rather than the upright portrait mode for most iPhone apps, forcing developers eager to use the new mode to adjust for the realignment.
But while these limitations have already been discovered, developers have already written basic code and plan to explore the MPTVOutWindow function more in the near future to see what it will do; an example of this is provided below.
Surely there is a way to modify your apps to display them fullscreen??
iPhone Video Out from Ars Technica on Vimeo.