If the Dreamcast didn't get discontinued in early 2001 then sure, it's possible they could have released an mp3 player vmu. We don't even know if the TGS prototype was a functional unit or just conceptual mockup. Either way, it would still be a case of too little too late.

When I said it would rip CDs very slowly I was referring to the processing speed, not the drive speed. Comparable processors of the time would encode at about 0.6-0.8x speed depending on the encoder used and I doubt the average consumer would want to spend 2 hours to encode a single CD worth of music on their dreamcast.