Way back in 2005, Apple added a features to iTunes to help users of the new, storage-constrained iPod shuffle manage their music: users could elect to have their high-bitrate songs converted to a 128kbps AAC file before they were synced over to the iPod. Over the years, Apple added this feature to higher-capacity iPods and eventually iOS devices like the iPhone and iPad, but the company has finally added more options for those who crave higher-quality music. With the latest version of iTunes, users can choose to transcode and sync music in 192kbps or 256kbps AAC format in addition to the 128kbps option.
We gave this a shot and it appears to work as promised, with MP3, AAC, and Apple Lossless files all being transcoded on the fly upon being synced to our various iDevices. While the majority of iTunes users probably will never use this feature, it does provide a good way for users with large (or lossless) libraries to sync higher-quality AAC files to their portable devices. Of course, you'll need to prepare for longer syncing times when taking advantage of this option, but our Core i7 iMac was able to transcode and sync an 8GB playlist that consisted of mostly Apple Lossless files over to our old 120GB iPod in about 20 minutes (the playlist took up just over 3GB when all was said and done) — just make sure to leave yourself some extra time if you're syncing a large playlist.