Q: If most of my iTunes library is encoded in the Apple Lossless codec, is it possible to set up iTunes so that songs are automatically encoded to AAC when they are transferred to my iPod?
– Luke
A: This feature is built into iTunes, though unfortunately it’s available for the iPod shuffle only.
For users of other iPods, we unfortunately don’t know of any true solution for maintaining two copies of every track in an iTunes library, outside of storing both independent copies in the iTunes Library itself, and sending only AAC to the iPod using Smart Playlists.
Clearly, this isn’t the best solution, but it may be all you’ve really got.