AAC encoding, using Shuffle-saved iTunes for a Nano, file fidelity question

Love the little shuffle but don't understand possible limitations. I only have a Shuffle but may add a Nano. I'm trying to understand file encoding, decoding, etc..
When I upload a CD into iTunes (iTunes having been loaded upon initial Shuffle set-up) are the files automatically encoded as AAC files or are they saved in iTunes as the full-sized files (I don't recall the correct encoding for full CD-quality fidelity), or are they saved already encoded as AAC files?
While the fidelity of the AAC file is acceptable for in the noisy car or while running/skiing I would like to know whether adding a Nano to my quiver would allow me to utilize the 1000+ CD's I've already uploaded into iTunes, and whether the files in my current iTunes would load into the Nano as the higher-fidelity files. I would like to use the Nano to play tunes through my high-end stereo system and realize CD-like fidelity, not compromised AAC-level fidelity. Anyone familiar with all this? I would appreciate any help.

ExAlfa wrote:
When I upload a CD into iTunes (iTunes having been loaded upon initial Shuffle set-up) are the files automatically encoded as AAC files or are they saved in iTunes as the full-sized files (I don't recall the correct encoding for full CD-quality fidelity), or are they saved already encoded as AAC files?
Probably currrently set for 128kbps AAC... go to Preferences>Advanced>Importing
where you can set the encoder to be whatever you want as well as the bitrate.
While the fidelity of the AAC file is acceptable for in the noisy car or while running/skiing I would like to know whether adding a Nano to my quiver would allow me to utilize the 1000+ CD's I've already uploaded into iTunes, and whether the files in my current iTunes would load into the Nano as the higher-fidelity files.
That's dependent on how they were imported...(see above)
I would like to use the Nano to play tunes through my high-end stereo system and realize CD-like fidelity, not compromised AAC-level fidelity. Anyone familiar with all this? I would appreciate any help.
You can keep your music in the library as AIFF or Apple Lossless and
set iTunes to convert the higher rate files to 128kps AAC on loading to the shuffle.

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