Works but has limited functionality

Yes, you can use your iPod touch as the keyboard for your iPad, and since I often carry both around, this can be quite useful.

HOWEVER, you can only use the iPod Touch as an external keyboard when your iPad is running the External Keyboard app. This app can only be used as a rudimentary web browser and to send email.

Some notes:

1. There is no spell checking when you type this way. So, this would only make sense if you are really good with the iPod keyboard (and dont make many mistakes like I do).

2. The on screen keyboard on the iPad does not retract. (One of the main advantages of using a hardware keyboard with the iPad is that you recover the screen real estate taken up by the keyboard.)

3. Backspace does not function properly. If you move the cursor to a new location (say to correct a spelling error 20 characters ago and you just noticed now) and hit backspace, the cursor jumps to the end of the text instead of deleting the previous character.

4. To connect, launch both apps and wait for the "connect" indicator to turn green. If it doesnt connect, quit one of the apps and relaunch.

5. You can cut and paste. This could be useful if you want to type a long message in some other app. Type it in this apps email window, copy to the clipboard and paste in the other app.

RC2400 about External Keyboard