When I put into car dock, with the car charger attached, and try to use the headphone jack for car audio, the sound comes out as muffled with feedback. I have figured out that this issue arises due to the car charger. If the TB isn't connected to DC power, there's no feedback or muffling. I'm running CM7, 0704radio, imoseyon 3.5.8 lean kernal set to extreme mode. Could this be due to undervolting?
(I have tried to recreate this problem with AC power and the sound is fine)
It is probably your car electronics, not the phone. There must be a difference between the signal ground of your input jack and the ground in the lighter socket. I guess it could also be a bad DC to DC converter in your car charger (car is +12V, USB is +5 so they either use zener diode or a DC to DC chip). Try borrowing someone else's USB charger.