You also mentioned needing a CUE sheet. My source was my ALAC rip which does not have a CUE sheet. I don't know if the track 1-2 tiny glitch would have been eliminated if I had a CUE sheet or ripped to MP3 from the CD. Nor do I know if LAME is a requirement for getting (almost flawless) gapless playback out of iTunes; the Wiki article refers to "iTunes-encoded MP3s" being gapless, and I doubt that's LAME. Anyway, my CDs are in storage, and I'm not dragging them out to test.
If you have the original lossless versions, that's definitely the way to go.
The "loss in quality" issue for lossy-lossy transcoding is still interesting, because it's always relative to what you can notice, there are ways to reliably assess this, and you will likely encounter it if you have MP3 files and set iTunes to convert higher bitrate files to lower bitrate AAC when it syncs.
Yeah my bad, the main issue I have with the lowered quality isn't the sound itself but the loss if dynamic range and soundstage which can be noticeably lower. I have done some test (self tested though unofficial) and that was the main factor I have noticed with lower quality music especially classical or music with many instrument that are not synthetic.
