Great! Thanks for all the input and responses guys! Glad to see I'm not the only one floundering a 'bit' in this format ;^)
To further add to the confusion - after poking around a little in the iTunes settings, I also noticed if you highlight any song, then right-click on it, one of the options that comes up is 'Create Apple Lossless Version'. Hmmm, it even allows this option with a supposed MP3 iTunes purchased song, which again, I thought was only MP3 ??
But bottom line, I'm a 're-adjusted' audiophile, who like many was forced to sell off my main system and am now using an iPod based headphone system. So I'm looking for the highest possible rez. From what I'm learning so far, sounds like dumping iTunes altogether and going with a different music file system is the way to go?? Comments and suggestions??