You can already play AAC encoded .mp4 files in iTunes, you just can't encode them using iTunes, or play them on the iPod. There are several apps on versiontracker.com that'll take a CD and encode it to mp4, assuming you have QuickTime Pro. After they're encoded, they'll play just fine in iTunes.
And I somewhat agree about the "holding out on AAC to sell more iPods now." I've got an original 5 GB model, and way more than 5 GB of mp3's. The only way I'll get a new iPod though, is if it's a lot larger, and supports .mp4. I don't wanna encode my whole collection to .mp4 if I'm only gonna get maybe 100 more songs on my iPod. Hence the waiting for a larger model to support it.
Whatever Apple's reasoning about delaying it for so long, I just hope they release it soon.
And I have a feeling iTunes 4 might be a pay upgrade. Either that, or to encode in .mp4, you'd have to buy QuickTime Pro first. But if they charge about 20 bucks, maybe even 30 for iTunes 4, and it allows me to encode ALL of my CD's to .mp4 and fit em all on my iPod, I'll gladly pay the 30 dollars.
enoch