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The fidelity of compressed audio files just doesn't compare to the original CD. It can be close but the majority of the iPod electronics out there are made by off-the-wall companies that most folks never heard of, their quality is dubious at best. The Krell unit may be the exception but it's probably not affordable by most of us average joes. I still use my $200 PC sound card connected to a Theta D/A converter to play my MP3 files ripped from my own CDs. It does a great job with compressed files. Not sure how things would sound from an iPod if it had a digital output. Most MP3 players don't. I think the medium has to mature a bit more to be considered high-end.