It might, however we don't have any applications that provide that functionality, so it is purely experimental as to whether this works or not. Some applications may allow you to choose your audio source, you'd have to look and see.
Keep in mind that whenever you are using a USB Audio interface with an iPad, either with an interface like the iOne or iTwo with the MFI connector or with a Camera Connection Kit and a class compliant device like the AudioBox USB, both methods will take over the Microphone Input to the iPad.
If anyone else has experience with this, please share it here.
