I got a USB compatible stereo for my car today. I was wondering, if I plugged a USB Bluetooth dongle into the stereo, can I connect my phone to it via Bluetooth?

I would say no. The USB part of the stereo would only read file storage devices (ie USB sticks), not anything that uses a USB connection (ie bluetooth dongles, keyboards, etc etc).

You would need a headunit that supported bluetooth music streaming or bluetooth call function (depending on which one you wanted).

Ah that sucks, thanks. It turns out I can listen to music and charge my phone by plugging it into my headunit with my normal phone>USB cable. It's not wireless, but it's good enough.

It all depends on the software that the head unit runs and if it has drivers to support a bluetooth dongle.

The answer is still a 'probably NO' . I've got a Kenwood headunit that runs a type of Linux OS, I'll plug a BT dongle into it and see what it thinks of it for you.

Oggy.

OK, tried it and the light inside the dongle didn't even light up, so I don't think the OS was at all prepared for it.

Other headunits could give other results. IMO the Chinese ones might have a better chance as they probably run a more complete OS, instead of a trimmed down one for the device like a name manufacturer would probably spend time developing to reduce the chance of it being hacked.
I investigated a firmware upgrade of the Kenwood unit and it looks like a heavily customised and restricted version of Linux (at least to my relatively unskilled eyes)

To be fair you're not missing much, the sound quality you get by streaming audio over A2DP isn't fantastic.

Ah that sucks, thanks. It turns out I can listen to music and charge my phone by plugging it into my headunit with my normal phone>USB cable. It's not wireless, but it's good enough.
Yeah that's it, your headunit recognises the mass storage device part of your phone (where your music is) and will play that.

Like Nemesis said you'd get better sound quality this way anyway.

Ah that sucks, thanks. It turns out I can listen to music and charge my phone by plugging it into my headunit with my normal phone>USB cable. It's not wireless, but it's good enough.
Yeah that's it, your headunit recognises the mass storage device part of your phone (where your music is) and will play that.

Like Nemesis said you'd get better sound quality this way anyway.