Also, wouldn't there be some quality loss or introduced artifacts by going from digital->analog->digital? Or am I wrong there?

You are correct. That's the same reason we rip CDs digitally instead of sampling them through the sound card's line-in.

There are products such as Total Recorder which will intercept the raw digital wave audio data as it's headed out of the sound card, and stream it to disk. This is the functional equivalent of doing the record-wav-input thing he suggested, except without the D-A-D quality loss.