You don't need to worry about the mic settings when connecting to the line input.
I don't use a DR-1, but I know it has no level control for the line in so you'd need to adjust your levels by adjusting the volume of the car stereo. If you don't already have a DR-1, I'd spend a bit more and get a recorder that allows you to adjust record level when recording line in (most all do, I think). That way you could have the car stereo playing at the volume you prefer and set the record level to whatever level is appropriate.