unless it is Classical or Jazz.
Precisely. Some kinds of source material--concert hall presence during quiet passages, challenging transients in the sound of a harpsichord--get trashed in lossy recording. A lot of it depends on whether you know what real musical instruments in an acoustic environment sound like. If you've had that experience then you will be less tolerant of even high bit-rate lossy compression. You'll probably be somewhat critical of the whole recording process, but that's the price we must pay just to hear a lot of music. Use FLAC to keep that price to a minimum.
I found this approach when I was looking to back up my slimserver hardware after slimserver was bought by Logitech and then dropped, although they continue to maintain the server software now called Logitech Media Server.
CDs are stored in lossless format (flac) on the server (which could also host a player, but I don't.)
You could use your iPods as controllers and players (see the app store). What I don't know is how well synchronizing works for iPod players--haven't tried it.
Are you having fun yet?