Had good success last night with the 8GB Nano/Moto D650/Moto S9 combo last night.
I had previously purchased a Nike Arm Wallet to hold my 8525 while I jogged. I found that the pocket is just deep enough to hold the Nano/D650. I had absolutely no drop-outs all night. I was a bit concerned about the battery life but I went at least 2.5 hours total. The Nano battery indicator will drop quickly but then stays in the red for another couple of hours.
The ultimate solution of an iPod like interface streaming from a remote library is still a year or so out. The bandwidth is there but the nice front end with minimal CPU usage, local ID3 Tag indexed library, AVRCP/A2DP, and a robust connection to the server are no where to be found.