I agree, don't take it to school. It is a toy, a very expensive toy, but still. An Ipod is an entertainment device, not necessary for living, safety or school/learning. I'd say, leave it at Grandma's for the weekdays, take it home on the weekends, or leave it at home all the time. I would make It an incentive/reward for getting through the day at school well - without causing trouble in the halls or on the bus.
I believe the school has those rules for a partcular reason, and instead of teaching your son to find a way around rules, you should be teaching him they are there for his protection, and he needs to follow rules/laws, just like in the real world, outside of school, we all have to follow rules and laws at work, in society.
Next year when he has a cell phone ( I understand that, for safety) I would have him leave it in the front office in the morning, labeled with his name, and pick it up on the way out of school each day. If he HAS to have the Ipod with him at school, I would suggest doing the same thing.
As for being on the bus and the hallway for a few minutes before class, he needs to learn to control his actions without a "distraction", have you tried consequences when he misbehaves? When you are grown up and sitting in a meeting at work, the Dr.'s office, the DMV, or waiting any number of the places we have to sit and wait without "being entertained", you have to learn to wait patiently and still pay attention to your surroundings, now is a perfect time to start learning those skills. At most I would say get him some good paperback books he enjoys reading, and have him read, at least then he is expanding his mind while entertaining himself in a way that will not be a big issue to secure at school - how many kids steal books - and even if they did a few paperbacks are alot cheaper to replace than an Ipod.
Good Luck!
Jessie