It's a clever thought, but you can't just retune a GSM receiver into the FM band. Even if you could, you can't get access to the raw analog output on an iPhone (which you'd then have to demodulate yourself, which is the one piece of this that is just difficult, rather than impossible).
The piece of gear you would need would be an external FM receiver. That's completely buildable; just not in software. See the Griffin iFM for an example.