I listen to techno on Panasonic HS-77s attached to Sony MD player playing (of course) AATRAC format at low resolution, LP4 or whatever. I recently got an HD650 + Creek OBH-11 Amp set up, and I pass MP3 into that set up using a Motorola M25. I've found that MP3s at 128kps can sound really crappy if the source or the recording method was crappy. Notwithstanding, about 1/3 of the 128kps bitrate songs sound pretty good, meaning -- there is actually a soundstage and there is not that digitization effect or excessive static. The bad recordings can be very bad though. At 192kps most songs sound pretty darned good. There are MP3s like "Every Day Is Like Sunday" by the Smiths which have tremendous spacious er... open-ness. I've been experimenting with burning MP3s at different bit rates and different modes of processing using Wavelab and so far my conclusion is that the worse the CD source quality is, the less the bitrate matters. I've also played some relatively well processed recordings in 24 bit WAV format at CD quality and the 192kps bitrate version sounds about the same. One thing you could do is if you have an MP3 that doesnt sound so great, use a WAV processor and convert the MP3 back into WAV format and then recompress it at a higher bitrate with some filtering effects (to increase or decrease soundstage effect). I've gotten some pretty bad bootleg version of live recordings from the Internet and cleaned them up in that way. The sound can still be pixelly, if you know what I mean, but the clarity and stereo imaging can be improved greatly. The other thing you can try too, which is fun, is to use the spacial processing ability of programs like PowerDVD -- you can play MP3s on it and get different and interesting sonic renditions. Your headphones can sound like a live stage or a recording studio, for example.
I also have been trying the headphone amp with some lower quality headphones, and the shortcomings of lower quality headphones playing MP3s were magnified -- static and distortion beyond the dynamic range, or simply too much power or whatever than the headphone could handle which the HD650 had no trouble with -- much less clarity. I probably wouldn't care much if I were jogging, but if I'm laying in the dark and listening for textures then it would really bother me. Anyway, hope this helped somewhat.