For the music lovers out there, DockArt takes the “Now Playing” notification concept a step further and actually replaces the iTunes Dock icon with the currently playing albums cover art. It’s a free iTunes plugin that is compatible with iTunes 10.4 or later, but has been confirmed to work in iTunes 10.5.1. This is how you get it working:

Download DockArt for free from the developers page

Quit iTunes

From the OS X Desktop, hit Command+Shift+G to bring up the “Go To Folder” window and enter the following directory path:

~/Library/iTunes/iTunes Plug-Ins/ Drag the ‘DockArt.bundle’ file into that folder

Relaunch iTunes and start playing a song

You can further customize DockArt by going to “View > Visualizer > Options”, where you’ll see options to adjust the icon size, show the iTunes badge, progress bar, etc.

To get the most out of this plugin, use the iTunes “Get Album Art” feature to fill in any blank covers in your music collection. If an album or song doesn’t have cover art associated with it, the default iTunes icon gets displayed instead. This plugin generally looks best with larger Docks or with magnification enabled to see the most detail.

Thanks to Andrey for the tip from the comments!