I have the 2004 with 10 speaker JBL with am/fm/cassette/in-dash 6 disk.
I NEED my XM!
I had a factory head unit with built-in XM in my 2003 Silverado -- it rocked! Quick access to all stations -- great sound quality.
I have a Pioneer FM modulated XM in my Sequoia -- It sucks. Sound is really not enjoyable.
Therefore, I went down to the local car audio and ordered the Alpine with the built-in XM (not one that goes through the AINet) -- it's really built right in. And, they ordered up the adapter to make my steering wheel controls work; they were absolutely certain this would all work (except we weren't sure about the ceiling-mounted rear seat IR transmitter). Anyway, they got the dash all torn apart and found out that the harness needed to connect the Alpine to the factory system had CHANGED in 2004 -- the supplier (Scosche) won't have the new one done for about 2 months -- so they had to put it all back together and do big fat nothing.
So, my current plan is this: I've got a Delphi Roady on order (cheap! -- $119) -- I'll just run that through the tape adapter for now, like I do my iPod. When the harness is ready, I'll get the Alpine installed -- it will rock because it has integrated XM, will interface with the steering wheel and the 10 speakers, and... Alpine's got that new iPod adapter coming out this summer that will allow you to tuck the iPod away and access it all from the head unit. Then, I'll just use the Roady indoors with the home kit (free right now) and/or take it for rental cars when travelling.
My opinion in regarding XM sound quality:
Built in to head unit -- sounds great.
Integrated into head unit through direct connection, like the AINEt -- I asssume this sounds good -- not sure about speed of operation.
Hooked in through an aux input like with the Blitzsafe -- I bet this would sound just fine.
Hooked in through the tape adapter -- ugly, and just barely acceptable sound quality.
Hooked in through an FM modulater that's plugged straight into the head unit's antenna -- sux!
Via an FM modulator that's not directly connected -- it's just gotta suck even harder...
My 2 cents.