Steven Troughton-Smith writes on his personal weblog that he may have discovered a way to put his iPod nano into some kind of DFU-like recovery mode. By holding down the restart buttons through two reboots, iTunes will see the device and alert the user. Entering DFU/Recovery mode allows hackers to submit customized software to iOS devices, and doing so with the nano offers the promise of adding modified software.
Troughton-Smith tells TUAW that, now, he "can push firmware files to the device and have them execute." From there, he can boot disk mode or the OS using those firmware files. Check out the video on the next page for a screencast of the process in action.