There are a wide range of iPod cradles that allow connection of the DAC output of the iPod to your home audio system. The DAC used in the iPod is quite good (Wolfson) and will give perfomance at least as good as most CD players. The ne plus ultra solution is the Wadia iTransport that was just shown at the CES. This cradle authenticates through the security of the iPod to allow output of the digital bitstream to an external DAC. AAC music files purchased through iTunes is protected with FairPlay DRM and cannot be copied to a CD. Stick with MP3.

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There are a wide range of iPod cradles that allow connection of the DAC output of the iPod to your home audio system. The DAC used in the iPod is quite good (Wolfson) and will give perfomance at least as good as most CD players. The ne plus ultra solution is the Wadia iTransport that was just shown at the CES. This cradle authenticates through the security of the iPod to allow output of the digital bitstream to an external DAC. AAC music files purchased through iTunes is protected with FairPlay DRM and cannot be copied to a CD. Stick with MP3.

Actually DRM Itunes files can be copied to a CD using Itunes with no problem. In fact, doing so strips the file of DRM . This is one legal(approved bt Itunes) way to get rid of the DRM.
However if you re rip the cd to Itunes you will then have those files DRM free. However , if you want to preserve 128 you need to re rip to a ALAC . If you rerip to 128 AAC the rsult will actually be a lower bit rate(I think in the 90's)