Yes, this is exactly what you think it is. The iKaraoke from Griffin Technologies (scheduled to ship some time this winter) is a combination FM transmitter (there's a line out option as well) and microphone that broadcasts your music to your home stereo, minus the lead vocals. From there, you're set to turn on the included mic and do your best "Born To Be Wild." You can also add a bit of a reverb effect to your own singing, or bring the lead vocal track back up if you begin to panic.
No pricing was available at the time of this post.