Ah see the thing is that I plan to be continuously ripping new CDs. Yours is a good solution if you just want to rip the collection once and keep two copies, but I think if I ripped a new CD with your method, then the lossless files will go into the new folder and get mixed up with the lossy ones, or it would just rip straight to lossy and playing it in iTunes will point there. Thanks anyway.
I might look into MediaMonkey a bit more tomorrow. Seems to support ripping to FLAC, conversion and iPod sync, might be the best I can get. Then again I do have a few songs that I bought off the iTunes store... hmm.
What I'd really like is to be able to maintain 3 databases: one is stuff I've ripped since getting my new PC with terabytes of space, so FLAC. One is the current stuff off my Laptop, which is a mix of AAC ~196kbps, iTunes store with DRM, and iTunes Plus without DRM. The other one is automatically generated AACs from the other two, creating each song once from the best available source, to sync with iPod. Then I need a decent audio player that does the same thing, displays one copy of each song, and gets the best quality version from the 2 databases to play.
If someone could code that up for me that'd be great, thanks.