Yes it is. It's a compression format for digital audio, not analog audio. So to compare it with the CDA source (which is the actual source, not a vinyl or a collection of instruments or whatever you are referring to) it is lossless, as in it hasn't lost any audio details during compression from CDA to FLAC. That CDA is missing details compared to analog audio is a fact, whether audible or not, but that isn't really relevant to the discussion of whether FLAC is lossless compared to its source (CDA).
I understand what you're saying. But all studio masters get down-sampled before they are burned to CD anyway, so it technically does go through processing. I can see how it may be understood as lossless in terms of the owner of an audio track converting it to another format without loss of quality. But all i'm trying to point out is that digital can never truly be lossless in terms of quality as there is always some kind of mathematical limit.
The discussion of this thread isn't about FLAC compared to CDDA as it isn't even subjective. The OP was asking if they could get better quality than a 320kbps CBR lossy file. I wrote a post on the last page talking about using the "joint stereo" function in lame when using 320CBR MP3 which generally has a cut off at about 21.5khz. I haven't seen any ABX tests been done using the "joint stereo" function. I'm only aware of ABX tests that have been done using full stereo mode, which tends to cut off at about 20 - 20.5khz.