whooleytoo said:From what I've heard so far.. it seems iTunes decompresses the AAC/MP3 file, and re-compresses it with the lossless encoder for transmission. So if you're using the optical audio out, it's digital all the way so there shouldn't be any loss of quality. If you're using the analog out, then your guess is as good as mine!
yeah, that's how i understand it, although lossless isn't compressed. even though the file size is smaller than wav or aiff, apple lossless isn't compressed - that's nice b/c you can save your CDs as AL files and if you want, you can even convert them to wav or aiff later. some people at head-fi have done the AL to wav conversion and they say it's indistiguishable from CD to wav files.
as for the DAC in the apple express, i'm not sure how good it is...but using optical out to your stereo or external DAC should sound pretty darn good. the only conversion going on is the apple lossless to 16 bit PCM and i'm not sure how good that converter is.
it appears that with 54 mbps (theoretically, though not actual, i know) the streaming should be good enough to approximate the AL quality file...that's assuming you play songs that you've personally ripped as AL. if you're playing 128 aac files, air express' conversion to apple lossless isn't really lossless like ripping from a CD. it's just the kind of data stream air express uses...the aac/mp3->AL stream quality probably is only as good as whatever you compressed at.