on the AH, I am in the distinct minority in that I not only use iTunes to manage and store my digital music, but I actually still like and enjoy iTunes. Trust me on this, there are not many AH members who have any affection for iTunes. I don't buy music from the Apple store nor do I stream with them. iTunes I like however so even if we are the only two who do, there's at least 2 of us.
I have the exact same problem you are seeing. If I take a song and make several variations on the file format, when I search and display that song in just about any fashion except by file type, I will see the same song with x number of listings and it isn't obvious which is which without inspecting the individual song.
Its more of a condition rather than a problem. Its not broken. When I started to do my entire library in iTunes over this last year I decided to do it all in uncompressed lossless files. Rather than trying to figure out which song was in which format, I simply started a lossless library and that's what I called it "lossless library". If the song is in that library, its uncompressed and lossless.
That still allows the problem to occur. If I take an album and want to spin it off to an MP3 cd to play in my car, I need to make MP3 files first. Once I do that, now I have that mix again of file types. I don't make many CD's anymore so its a problem that's really not much of a problem. I tend to make my MP3's or any other file type change in my older library and don't do it in my lossless library. That solves the file type issue and multiples issue.
I know that's not a fix, but it is a workaround. Getting out of low bitrate and compressed files is a great idea. Getting in to lossless and uncompressed files is worth the effort. Absolutely worth the effort. Don't buy your music from Apple is also a good policy.