I would call myself a "digital audiophile" I suppose, since I fail to see that vinyl can have better sound quality than a good digital studio master.
On any system you can buy at BestBuy (Bose) chances are you won't see much difference between FLAC and MP3. The speakers aren't up to par, but most importantly the DAC isn't good enough.
I did blind listening tests with my Bowers & Wilkins 800 speakers and with a Burr Brown DAC the difference between 320kbps MP3 and Apple Lossless is slight but noticeable. With a dedicated PS Audio DAC the difference is very apparent, mostly in the higher frequencies.
I also purchase 24-bit studio masters from Linn Records and they really are better than CD quality. The detail and dynamic range is impressive. It is so engaging that you will find yourself listening to albums again, just for the pleasure of hearing beautiful music.
What seems to be the norm is that most CDs mastered in 1975-1985 sound better than most CDs mastered today, so if the original CD is mediocre to begin with then chances are you won't see much difference when you encode it to lossy, as the dynamic range is already compressed on the CD.