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With FLAC and OGG, I get highly compressed lossless audio. I have a logictec 5 piece surround sound system, which is not the greatest, but it is very good for the price. I don't necessarily consider myself an audiophile, but I do collect a lot of music and I still think vinyl sounds better than digital.
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I'm too lazy to read the rest of your long post... But haha! Lol, Logitec...
I'm talking about playing audio thru the Creative/Gigaworks T20 2.0 speaker system, which by the way beats most entry level 5.1 Altec Lansing speakers hands down, let alone Logitec speakers. This baby is so awesome that there is no audible distortion when no sound is playing (See CNET reviews for details)...
And obviously, you haven't played around with SRS Audio Sandbox, which artificially
adds back the missing elements in the music so that, say, the sound of a piano key degraded thru compression will sound just like the original when passed thru SRS Audio Sandbox. And yes, even on my high quality speakers, there is a ginormous difference between the audio quality played on Linux without SRS and on Windows with it... And yeah, even with lossless audio files, they can benefit from SRS with Circle Surround and bass boost, etc.