A few of my guys listen to their iPods and whatnot... I really don't have a problem with it as long as they still pay attention to detail.
Myself, on the other hand.... if I were to listen to music, my mind would wander and I'd probably end up running over the customer's cat. Not to mention the thought of the customer seeing me as I do my best Eddie Murphy 48 Hours rendition of Roxanne.
As to the legailty - no idea. Common sense says that the operator potentially wouldn't hear well enough to avoid a problem... but then ear plugs would do the same. I've always heard that it's illegal to wear headphones while driving a car...