Dylans4bass, thanks for the info. I dug through the Apple website and found confirmation about the conversion to Apple Lossless with Airport Express. It was buried midway within a 31 page tech document. What confuses me is where the conversion actually takes place. Is it in the computer running iTunes/AirTunes or is it in the Airport Express. I would assume it's in the computer, but when I run the Activity Monitor I do not see any additional CPU or disk activity when playing music through Airport Express vs. the internal computer speaker.
BTW, what does your webname signify?