I was wondering could i use my iphone's earphone jack's output as a signal input to the circuit so that i can transmit things through my FM transmitter.
use an unused frequency
but you can technically (NOT Legally) use very short range FM transmitters if their range doesn't exceed the limits of your house.
Now i do not suppose that will make any legal offence,
Their are no unused frequencies in the FM band. If you find a channel where you can receive no signal that does not mean that the channel is unused. It means that if you transmit from that location their will be a place that can receive your signal AND the signal that is supposed to use that channel and thus you will cause interference.
So you view of legality it that it dosn't matter what is legal as long as their is little chance of getting caught.
What country are you in? In Europe any transmission no matter how short is illegal.
Here in the US, before the do-it-all- smartphone /car stereo, they sold a low power transmitter that simply plugged into the audio jack of your phone and could be played over a FM station in your car. I had one. It was horrible.
apply for an FM broadcast license if building one himself