Apple needs to do something about that green button that does nothing useful IMHO. I was seriously hoping they would fix this in Snow Leopard, but surfing through the developers' builds, I don't see anything of the sort.
You can use a nifty freeware tool called RightZoom (http://www.macupdate.com/info.php/id/30591), which gives the OS X green button a true maximize capability. That would help with your iTunes window problem.