I read up a little on the AAC format here: http://wiki.hydrogenaudio.org/index.php?title=AAC
Sounds like an excellent alternative to FLAC even though it is lossy. According to the wiki, it is the successor to the MP3 format and doesn't look to go out of favor any time soon with several big name companies backing it. I too thought AAC was a proprietary format used by Apple...must be all the As. Which AAC encoder do you use bigshot?
That said, I've started with and am sticking with FLAC. Like you said, the little voices in my head would get to me at night knowing that I had encoded my entire CD collection in a lossy format for 'Audiophile' playback. Either way, carry on with your format discussion gentleman 