A few weeks ago it was my birthday and I received Rock Band 3 and the Squier Strat guitar/controller. One of the first things I did was to hook it up to my iPad via the CCK and a midi cable. Worked a treat! Tried it with Garageband, Nlog Pro and BS-16i. Latency is surprisingly low, and definitely playable without compensation. Bending strings has no effect, neither does tremolo, so your expression is limited to how hard you pluck the strings, and that can be a little quirky too. Fretboard tracking is just about spot on (once I'd set the guitar pickup and fretboard how I wanted them) and chords work just dandy. In essence the guitar works like a keyboard - the strings (from the "mute" bar forward) are simply there to make contact with the frets to tell the controller where your finger is. It is the part from the pickup to the mute bar that tells the controller which string is being plucked and how hard.
One interesting feature (a bit annoying really) is that plucking an open string never sends a midi off, so open string notes sound forever until you mute the string manually. Obviously with a synth patch that releases itself this is not a problem, but most of the patches I used were a pain and had too be muted by hand. Ironically most of the guitar sound patches I used suffered from this. You could probably do somethihng clever with Midi filtering on a PC I suppose.
Overall as a "bonus" feature I think it makes a reasonable midi guitar at a pretty decent price. In the game itself (Xbox 360) it is fantastic and will definitely raise my (currently poor) playing skills, especially picking (which I tend too avoid normally).