The 1989 and 1987 electrical audio diagrams show a 7-wire cable going between the radio tuner and the tape deck when offered separately. The head unit would most likely pickup the presence of a ipod as there would most likely be a signal wire which would signal the radio to switch from radio to tape mode when a tape is inserted.
Ipod pinouts

1989 Montero 2-Dr 3.0L V6 15X8 ProComp 97 Series w 30.5x9.5 Cooper M/T's

http://www.cardomain.com/ride/3143932