You're good at explaining stuff!
I think I rip some of my CDs to different formats and compare them to FLAC/CD-audio.
But atm I dunno if I hear any difference between those...
Still waiting Essence STX to arrive.
MP3 at around 128 kbps is much easier to hear the differences. I have a tin ear when it comes to hearing lossy compression problems, but even I can hear problems at 128 kbps. I cannot hear differences (except in rare cases) at high bitrates (at say LAME -V0 or 320 CBR).
I still chose to do lossless when given the choice. Lossless is much better if you plan on keeping your music files for 5+ years. Lossless gives you future proofing because you can change to new formats without loss. Lossy files are stuck at what they are and it is very very bad to re-encode them to something else.