I did find a solution to my iPhone-iPod-music-overriding-streaming-streaming-services-while-connected-to-USB problem
There may be other/simpler ways, but this seems to work:
1) Launch Pandora (or could be Mog, or other BMW Apps app) BEFORE you start iPhone/iPod playback
2) Start playback of Pandora via ConnectedDrive/BMW Apps.
3) Press Home button on iPhone, launch your streaming app.
The car still seems to think it's in the ConnectedDrive audio menu, as evidenced by the Entertainment details screen. You can now consistently play back any other audio service via your iPhone without the iPod audio overriding what you're doing. Good times! The only drawback so far is lack of ability to skip tracks via the steering wheel. That is OK in my situation, as I have the iPhone docked just ahead of my iDrive knob, so I can change tracks or navigate while stopped.
This is actually better than what I had in my M3 + cradle. When the iPhone is docked in the cradle, it was really impossible to launch an app, change a Live365 preset, etc.