I found the problem and the solution.
The problem:
The new IPhone 4s, like many amplifiers, does not like a capacitive load. An inductive or resistive load it will drive just fine, when presented with a highly capacitive load the final amplifier will oscillate. In my case it was oscillating at 200khz. Yes this is WAY outside of human hearing, so my cassette adaptor is mixing this within its circuitry, or the car stereo is mixing it down into the audible frequencies.
The solution:
My cassette adaptor had a little printed circuit board inside of it. The circuit on the board is very simple, mainly to match the head adaptor to the headphone cable. It does this via a RC network. Unfortunately they put the capacitor first then the resistor. The solution is to put the series resistor in front of the shunt capacitor, thus increasing the impedance of the shunt capacitor by the value of the series resistor. This stopped my iPhone 4s from oscillating.
Summary:
I opened up my cassette adaptor and moved the shut capacitor from the headphone side of the resistor to the cassette head side of the resistor.
Note:
The capacitor is also there to prevent the RF noise from the phone's cellular and wifi antenna causing noise on the stereo.
Good Luck!
Chuck Kamas