I totally disagree with your point about why people buy iPods- they buy iPods because they want to listen to music when they're not in their house or in their car, and for those uses sound quality really doesn't matter all that much.
This is contrary to my experiences. I actually don't know anyone who uses an I-pod, and chooses WAV files otherwise for more "serious listening". Maybe you do, but none of my friends or family do. Its not just for jogging and the car. Its for everything. Its the library they bring to friends places. Its what they use for their own home entertainment.
To make things worse, the systems often used to reproduce their music is either some $20 mega-cheap dock, or even a laptops' speakers. Im not saying everybody does this (because I wouldn't know), but this happens a LOT.
I got one friend a gift. It was a greatly discounted Monitor Audio I-pod dock for $100. He thinks its AMAZING. He can't believe how "LOUD" it gets. While I am very happy my friend is happy, its not much surprise to me. Oh, he could afford better, he drives an S2000 and is a recruiter of top talent for a very big company. He's not stupid either. He was using a $20 all-in-one dock. Oh, btw, 100% of his music listening is with that I-pod.
My brother listens to 100% MP3 files from his laptop fed to the Onkyo HTIB that I gave him.
I know a CI guy who just did a really big job for a restaurant chain owner. Multi-room, you know the deal. The client uses his I-phone to listen to music in his car. He comes home, right next to the entrance, he docks his I-phone, which is also his library for home entertainment. Oh, he could definitely, definitely, afford much better quality. He doesn't care, doesn't know. It's purely about convenience. SQ? Yeah right...
As for popular music, I think MP3 works just fine. Trying to get pop music to have great AQ is like worrying about getting TV commercials to have perfect PQ. Pop music is designed like a commercial. Get your attention real fast, give you the jingle, and keep repeating that jingle over and over again. They are short for a reason too. Oh, and loud and compressed the whole time. Im talking generally. I would expect that some quality stuff slips in every once in a while to the Top 40, but I wouldn't really know.
p.s. Pat, don't slap me please! I disclosed my expenditures earleir in this thread!