Yeah I was wondering If the Droid 1 even had the hardware to support FM reception??
From what I've heard and read in the past, yes. There was a huge development topic at Alldroid awhile ago. But the main guy working with it ended up getting in a motor vehicle accident, and ended up with a ton of medical bills, and little free time to continue development.
That was Speeddymon from the old Alldroid. I believe the big issue with the prior efforts was figuring out the audio routing, apparently he could tune stations but the device never sent the audio anywheres. I could be wrong, but that is my recollection. Unfortunately, since all of those posts are gone forever, I have no way to back up what I said.
However, if the above is correct, it would mean that the proper connection IS present between the headphone jack and the FM tuner hardware. We will probably be scratching our heads FOREVER trying to figure out why they put the circuitry in the device, but no app to make use of it. Although I think the FM tuner is built into all OMAP34xx series chipsets as it's part of the bluetooth chipset.