Personally....i'd never drive with headphones off the strength of I stay with a quality sound system in my whips.....

But on the bicycle I wear headphones majority of the time. I can hear fine with them on. They make ear plugs that are designed to allow ambient sound in, most good sports style head buds are designed this way.... and them cheap ass iPhone plugs are such a poor fit that they let ambient sound in by default....

I'm not arguing the legality of it.....I know it's illegal...