I re-ripped many of my most favorite CDs to WMA lossless.  This is the only lossless and gapless format that the BS5 supports.  If you're going to re-rip, you may as well go for lossless and gapless.  If you have an iPod (or a BS2), this does lead to having to maintain some extra copies of music since these players do not play WMA.  Kind of a pain, but really not that bad...  Personally, I wouldn't bother to re-rip just to go from 192 to 256.

Is this necessary?  It depends on your ears, your listening style and your musical tastes.  I find I have to listen very carefully to tell the difference between lossless and 256kps MP3 (the format most of my music is ripped to) with most music (and often, if I'm honest, I cannot really say for sure).  I can usually tell when classical is compressed so I've never bothered with classical mp3s.  After I ripped my most very favorite 60-70 CDs to WMA, I decided I'd re-rip other albums to lossless if I found their current format lacking, and, so far (6 mos laster), I haven't re-ripped many CDs.

You can transfer music from iTunes on Mac to the BS5, but there's no automatic "sync".  You drag music from iTunes to the BeoConnect icon in the dock, and it gets copied to the BS5.  I do not believe there is connectivity from iTunes on Windows.

I think covers larger than 500x500 will not display, but I haven't messed with this very much.

Stan