No, the updated PCM2 does NOT play Apple iTunes protected files.
To play your iTunes music in your PCM2 equipped car, you have three choices, two of them (the last two) are NOT legal:
1. take your iPod with you and use a FM transmitter or whatever to listen to the music on it.
2. record an AUDIO CD from iTunes with your iTunes songs and convert these songs to unprotected MP3 files (pretty easy with Windows if you're using a certain program/driver to automatically unprotect the files).
3. there is a program available which can unprotect your whole iTunes music collection (compatible even with iTunes 4.8) and after that you're able to transform your music into MP3 or whatever you want.
I can't and I won't provide the names of the programs needed to do step 2 and 3 but if you do a Google search, you may find them yourself.
Regarding No.2: I don't know if the created audio files burned to CD using iTunes are protected, I never tried to convert them to MP3. They may not be protected, so converting them to MP3 is pretty easy with most CD burning applications on the market. If they're protected, just read again this post.