[color=66ff00]Most people like that don't give a damn if you use that argument.
I myself would not get too attached to it or even use it. Handing it in to the Fuzz sounds like a good idea, that way you can tell them it's what you wanted to do in the first place and tell them the university tried to seize it by coercing/threatening you.
That would be hella funny.

If it does work out, you won't get needlessly attached to an iPod, you may actually get the iPod completely legally and you've got a clear moral conscience.
That and the police might wonder why the university is auctioning off gear that doesn't belong to them.
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