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You can't see both at once and they both flash the same messages. Heat the caps with a hair dryer and gently pry them both up.
Make sure you don't pry the metal beneath the caps up at the same time. The hinge side contains a tiny extension that supports the casing, so start from the other side as shown.
The LEDs flash green, amber, and red. The dock plug has three conductive strips, plus the ground post.
It's safe to assume that the plug is multi-modal and switches between USB, analog audio, and possibly power modes. The separate power mode may not be necessary if they can get enough juice off a 4 conductor USB connection.
It feels sturdy. It's easy to fix an iPod yourself with our iPod parts and free iPod repair guides. We also sell Mac laptop parts.