It's not hiding the files...
# find / | grep mp3
/private/var/root/Media/iTunes_Control/Music/F00/APDA.mp3
/private/var/root/Media/iTunes_Control/Music/F00/BDRK.mp3
/private/var/root/Media/iTunes_Control/Music/F00/BKBC.mp3
/private/var/root/Media/iTunes_Control/Music/F00/BMPF.mp3
/private/var/root/Media/iTunes_Control/Music/F00/BVMV.mp3
/private/var/root/Media/iTunes_Control/Music/F00/CJLF.mp3
/private/var/root/Media/iTunes_Control/Music/F00/CKEE.mp3
/private/var/root/Media/iTunes_Control/Music/F00/CTWC.mp3
The files are named that way for indexing purposes.

Apple's trying to optimize the load times and such of the MP3s on embedded devices. On a computer it's not as much of an issue, and since people really don't need to concern themselves with how the files are stored on the iPod/iPhone, it makes a lot of sense.
This is how the iPod works as well.
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