I've bought a couple of albums now over iTunes. You can't beat the convenience. AAC at 128 is not bad. I'd say it's comparable to mp3 at 160 or 192. I can tell it's compressed but the encoding artifacts don't jump out at me like with 128 mp3. It's good enough that I can enjoy the music, which is generally not the case with 128 mp3. I listen on my iPod so I haven't tried transcoding.