AAC is "more efficient" than MP3...meaning that, to most people, AAC-encoded sound files sound better than the same ones encoded in MP3 format.
That said, the bitrate is very important...in order to shrink the filesizes as you have done, you have decreased the bitrate, which decreases the quality. What was your MP3 bitrate and what is your AAC bitrate? It looks like you did something like take a 256 kbps MP3 file and convert it to 128 kbps AAC. You shrunk the size, but you've also likely lost a bit of quality. But that loss may not be noticeable to you, especially for playing on a shuffle in the noisy real world. But 128 kbps AAC should sound better than 128 kbps MP3 would have.
The shuffle will play both MP3 and AAC formats, so there's no real worry there. You just need to find a bitrate that gives you a quality you can live with. Most of the songs from the iTunes Store come in 128 kbps AAC, and that's fine for a lot of people, but not necessarily for audiophiles.
The other issue is transcoding. You've taken compressed MP3 files and converted them to a different compressed format (AAC). This can cause some distortion, as you now have the effects of two types of compression in a single file. If your MP3s were ripped from your CDs, it's best to go back to the original CDs and re-rip the songs in AAC format rather than converting the old MP3 files.
If you want to get rid of duplicates, there are a couple ways to do it efficiently. First, if you highlighted a bunch of songs and then converted them, the original songs should remain highlighted, with the new ones interspersed. If you hit delete, it should delete all of the old ones. Another way is that if they're in different bitrates, you can sort your library by bitrate, which will cluster all of the new ones and old ones separately.