Yeah...its pretty obvious.
If that's the case then I would recommend waiting to see if Sony comes to their senses and makes the ATRAC3 decoder an optional circuit path and allows the playing of redbook, wav, and lossless compression as well. They have not announced this, but now that Ipods have started to dominate the portable markets (and with good reason), I think Sony/Aiwa will need to be a bit more adaptable. If you can hear the difference between 320kpbs MP3 and redbook, I think you will also hear the difference between ATRAC and redbook.
Surely ATRAC3 type-R is close to cd?
Well, there certainly are plenty of people who believe this. Although I have not heard type R, I am inclined to be extremely skeptical that it is far superior to the MP3 format at similar bitrates. Every music compression programmer seems to think that his solution is the ultimate one that will make lossless compression a waste of time, but it is not an easy task.
The human ear is a very sensitive instrument which can detect the smallest details in pressure waves. Considering how much some of us here spend on just interconnects, and how many of us claim to be able to hear the difference between redbook and SACD, claiming that most of the musical information can simply be thrown away based on some programmer's idea of what is not important seems absurd to me. In my view, all of the musical information below ~24khz is important, and even if some of it is not, I do not trust some coder (who might not even be an audiophile or have sufficiently good equipment) to decide for me which parts I need to hear and which parts I don't.
Some of the compression programs are open source and you can actually examine the code (OGG for instance) so that you can see the kinds of decisions they needed to make in order to save all that space. The programmers for the AAC and MPC encoders (two of the best) occasionally even post at hydrogen audio. They may be willing to answer questions about how they do what they do and/or how they go about deciding whether a particular space saving strategy is audible or not. We can only hope that they have the ultimate audio equipment, extremely good recordings, and lots of time to compare many different musical styles with an instantaneous A/B comparison setup.