iTunes 9.1 to support AAC transcoding?

Finally, iTunes 9.1 is claimed to offer several changes to device support, including [...] the ability to automatically convert songs to 128 kbps AAC format when syncing to devices. This feature, currently available only for the iPod shuffle, will reportedly be extended to all devices and will allow users to fit more audio files on their devices while the original higher-quality files remain untouched in iTunes.

This addition will make me one happy camper. My entire library is in lossless format, and on the fly transcoding will let me store 5x more music on my iPod.

Update: the rumors were right. Thanks, Apple!