Throughout the federal government, all technology must meet adhere to strict accessability requirements to make accomodations for people with disabilities. In general, it applies to any "technology product" more complex than a pencil.
The regulations generally make sense. For example, if you have a web site, you need to use features that make it work with screen readers. Otherwise, you're just being spiteful to blind people (or making it impossible for blind federal employees to do their jobs). Similarly, videos need to be have closed captions available for the deaf.
Enter the new iPod with video.
Some nameless federal agency (no not that one -- I said nameless, not spooky) wants to start publishing video podcasts. According to section 508, all video needs captions for the hearing impared. Easy enough to do on broadcasts, video tapes and DVDs where optional captions are the norm. But videos? MPEG4 doesn't support captions, so the captions need to be rendered onto the image.
But who will be able to read those captions on that itsy bitsy 4" screen? At first glance, accessibility requirements will scuttle these video podcasts. Either the video will contain captions so large that they obscure the image, or the video will be uncaptioned and therefore inaccessible.
But waitasecond. How many deaf people actually listen to music on an iPod? It's an iPod!