Lisa,

I can only speak for what's currently in my posession, an iPAQ 5555.

I'm sitting at my desk, having just got home.  I walked in the house
listening (by headphone) to an audio book from Audible.com.  This book is
still playing in my ear.

Upon reading your question I flipped open a new note and hit RECORD then
made a brief statement to the microphone (never switched off the audio
book).  I then opened & played the new recording which played back over the
sound of my audiobook.  I then stopped the audiobook and played my sound
again (no overlapping audio from the book) and heard the sound again.

So, at least on the 5555 iPAQ it does indeed appear to be true duplex.

I hope this clears up at least the possiblity that what you're wondering is
at least likely and is certainly possible.  You've also helped me answer a
question I didn't even think to ask.

Terry