Yes, iTunes actually edits the ID3 tags in MP3 files. The proof of this can be had two different ways:
1. Do a Get Info on an MP3 you've edited in iTunes. You'll see it display the new ID3 metadata.
2. Get yourself another audio app, even something like, say Audion, and look at the ID3 tag in it, and you'll see it's changed.
I know this is an old post but not much has changed. Tag & Rename is the best Windows app for retagging large mp3 collections. There's really nothing in OSX (And Media Rage blows) for doing that. iTunes is really really slow process.