iPod don't naively handle FLAC and converting to ALAC from FLAC is normally a two step process. FLAC -> WAVE -> ALAC.
iTunes don't understand FLAC and as far as I know now other tools write ALAC, this will change that.
I'm from Windsor Ontario (Border city to Detroit), and never meet any one that had to use satellite based Internet, Most everyone has DSL, Cable, WiMax like Wireless and of course 3G etc. My guess is that 90% of Canadians affected by this live in igloos.;)
It's low power vs 200-350 watts for a used 386 or pentium, the screen and keyboard are meant to be left at the station(at the school maybe) and shared by who ever is using it. and yes it will need at least a few gigs of flash. Try fitting a XO in your pocket.