To answer all of the above:
I certainly do not use lossy compression. That would be a violation of every audiophile instinct (neuroses) in my body! I use uncompressed .aiff, which as a side note, I believe is identical to .wav in sound quality. I use it because .aiff seems to handle meta data tags better and if the iTunes library every gets corrupted or lost, the files themselves will retain some artist and album information.
The operating system is Windows Vista. In this case, it makes a difference because I am not aware of a program like EAC on the mac. You could do this with XP. Plextools might give similar results on Mac but I'm not sure about that. I don't have a mac.
The process for me is the CD drive straight to an internal hard drive that is separate from my main system disc. The library is managed by iTunes. The Squeezebox III serves the files to the DSC from wifi and provides the interface. My computer (intel quad core) serves as only ripper and file server.
The process to integrate EAC with iTunes is as follows:
1. Download and Install EAC
http://www.digital-world.de/downloads/audio/exact_audio_copy_v_095_beta_4_international/1253089/exact_audio_copy_v_095_beta_4_international.html
2. Download and Install iTunesEncode in the EAC folder
a.download at: http://www.hydrogenaudio.org/forums/index.php?s=41a94476ff9f5e9a25eea39e5c88c32d&act=Attach&type=post&id=1617
b. Extract iTunesEncode.exe into the same folder as EAC, usually it is (C:\Program Files\Exact Audio Copy). Just copy it into the folder, there is no installer program for ItunesEncode.
iTunes Encode is a command line program that needs to be fed a command string to tell it what to do. EAC will feed it that string but you have to set it up.
3. Configure EAC to use iTunesEncode
a. launch EAC (you may have to go through EAC configuration wizard if you haven't yet.)
b. in EAC, go to the following menu: EAC-->Compression Options-->external compression.
c. In external compression, set the following options:
(i). check "use external compression"
(ii). parameter passing scheme: set to "user defined encoder"
(iii). press "browse" and find and select the iTunes encode program, which should be in your EAC folder at this point.
(iv). Make the file extension option the extension of the itunes compatible format you wish to use (.aiff, .alac) but note that changing this only marks the files with the exension, IT DOES NOT ACTUALLY CHANGE THE FORMAT. That part comes next.
(v). Most importantly, enter the following command string into "additional command line options":
-e "AIFF Encoder" -a "%a" -l "%g" -t "%t" -g "%m" -y %y -n %n -i %s -o %d
Just copy and past it in exactly as it is seen above. If you want to use an encoder other than AIFF, change "AIFF Encoder" to to a different encoder. Within those quotes you can name whatever iTunes encoder you want to use and THAT is what will tell iTunes to use the appropriate encoder.
You may choose from "AAC Encoder", "WAV Encoder",
"MP3 Encoder", "AIFF Encoder",
or "Lossless Encoder".
(Default is "AAC Encoder".)
Some of this information is included in the readme file for iTunes encode.
(vi) I don't think the bit rate pull down does anything in this context but just to be safe make it the highest value which is 1024. It don't think it is really a factor though.
Click OK. Now EAC should be configured to encode into itunes. EAC will rip the files and after each file rip, iTunes encode should automatically launch itunes and use it to encode and important the files.
Note that EAC is capable of either retaining the original wav or deleting it. I personally have it delete the original wav automatically.
There is one other nuance here. The way I have my iTunes setup, everything it imports gets neatly COPIED and placed into a series of folders organized by artist and album. iTunes does this automatically for me and probably for you to. Thus after ripping, you may have a copy of the encoded file in your EAC folder, or whatever folder EAC is set to output to, AND in your iTunes music folder. This is a product of iTunes making a copy and keeping your itunes music folder organized. What I do is clear out my EAC folder the same way I would periodically empty the trash bin otherwise the duplicates build up. I also make sure EAC is set to delete the original .wav it creates before encoding or I would actually have three lossless copies on my drive after each rip.
Hope that helps.
