I've got two separate iTunes libraries -- one of which consists of about 26,000 songs ripped to MP3 (most in 128kbps), and the other of which consists of about 6,000 songs ripped to AIFF (lossless).

MacBook Pro houses both libraries, which are connected via Ethernet cable to my network.

I use my 2nd-gen AppleTV to access both libraries.

I also have a Peachtree Audio DAC*iT in the system.

I can tell a HUGE difference between the MP3 files and the AIFF files. For one, the sound stage on the MP3's fits between my speakers; the AIFF files play sounds outside the speakers. SQ on the AIFF files is as clear as the original CD's played on my Oppo 93.

There's only a slight difference between SQ on either library when played through the DAC*iT -- it enhances the bass somewhat. On the AIFF files, that results in a better, "fuller" SQ; on the MP3 files, it seems to make the sound more muddy. So when listening to the AIFF library, I'll feed it through the DAC*iT; on the very rare occasions I play the MP3 files, I ignore the DAC*iT entirely.

I also have about 500 high-resolution files downloaded from HDTracks.com. I access them through the Integra DHC-80.2. Those files have a better SQ than either the MP3 or the AIFF files.

As for CD's sounding better than vinyl ... not in my house, they don't. Sure, my vinyl has the occasional static pop and tick, and I don't have to worry about that at all with AIFF files. But the vinyl almost uniformly gives me an even larger sound stage AND better dynamics. The music is more engaging in every way I can think of.

And my ears as bad as anyone else's -- I'm 52, and I've been to see Aerosmith on every tour they've done since I was 15 years old.