Do you have it muted? Whatever this thing is it seems to have a volume control on it....so if the volume is down or on mute then you will get no sound.
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This is not designed to control the iPad by itself. It's designed to control the iPad while its sending music to an external source, whether by Bluetooth or headphone jack [wires]. The internal speakers cut out because you are sending sound elsewhere (the behavior is the same as if you had plugged in headphones - the sound only goes through the headphones and not through the internal speakers.
I'm plugging the sound into a speaker, via the headphones cable. Regardless of that, I've tried bluetooth audio, internal speakers and headphones. The sound completely cuts out when plugging the adapter into the 30-pin plug. A charger cable doesn't affect it, just this adapter.
I just wanted to know if there's a way to force the iPad where the sound should be channelled. Maybe there's an app that can control this setting?