Unfortunately, no.
This is something I just found out on my own, it's too bad it is that way. At least it updates playlists when sync-ing. Does anybody know a "work around" for getting the v2.0 software on a 1G ipod? That might make live updating work.
That would be a really cool thing, but I highly doubt it would ever happen. Blame the marketting gurus at Apple.
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Unfortunately, no.