So -
You need to rip in Apple Lossless with error correction on and all of the options under Playback off. This is mandatory and gets you most of the way there no matter what else you do.
Then if you want to take it to the max you need to go to ALO and buy a big money cable...
I recommend one that plugs into the USB port on the bottom of the iPod rather then a 3.5mm that plugs into the top
Reason buying that the USB plug is post DAC but pre the op amps and volume control which feed the 3.5mm plug
Note that in this mode, the iPod volume wheel does NOT control the output level of the USB port - this needs to happen downstream in a pre