Music Taking Up way more Space than before.  What is the best file format?

I just bought a new Mac Book, and have been importing most of my CD collection into I-tunes to put on my Ipod Video. The Default in iTunes seems to be import using AAC Encoder at a setting of High Quality 128kbps.
However, I only have 2800 songs in my library at the moment andit is using 17 gb of Hard drive space on my computer and my Ipod. Also all songs came in as MP4 format.
Before getting this new computer, I had the same amount of songs and it used about half of that.
I have 3 questions.
1.) What is the best format to cut the amount of space used, but still have a high quality sound.
2.) Is there a way to convert what is in the library to another format such as mp3.
3.) is this going to require me to save my Itunes folder to an external drive, delete the library,and then drag all back in to itunes after changing the preference setting? What is the best way to do this?
MacBook   Mac OS X (10.4.6)  

I only have 2800 songs in my library at the moment andit is using 17 gb of
Maybe a bit high.
I have ~2500 songs at 12 GB. I’m using 160 kbps - AAC.
1.) What is the best format to cut the amount of space used, but still have a high quality sound.
AAC - 128 kbps. This is the default for iTunes and offers a very good compromise between size and quality.
To me, AAC 128 kbps is at least as good as MP3 160 kbps and the AAC would be 1/3 less the size.
2.) Is there a way to convert what is in the library to another format such as mp3.
Yeah, buit you don;t really want to do it that way as you will lose further quality.
AAC is a lossy format and when you converted it the first time, you lose quality. If you reconvert that to MP3, you will lose further quality.
3.) is this going to require me to save my Itunes folder to an external drive, delete the library,and then drag all back in to itunes after changing the preference setting?
No.

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