I use Pandora daily on my system. It's no match for a CD or SACD, but it sounds good enough to impress anyone that listens. I have to prove to them that it doesn't sound good by pulling out something better. I've been way more impressed that I would have ever anticipated. It's far better sound than my iPod on the dock using similar music files. Pandora is 128 MP3 and it takes Apple Lossless on my iPod to sound equal or better.
You can build quite a nice system and still enjoy an improved Pandora sound, it'll just never sound as good as other sources can.
You can build quite a nice system and still enjoy an improved Pandora sound, it'll just never sound as good as other sources can.