Check out how the iPOD killed high fidelity at
http://www.rollingstone.com/news/story/17777619/thedeath_of_highfidelity.
You're confused between two completely different processes, both of which are called compression. What the article is about is dynamic range compression: reducing the difference between the softer and louder parts of the music, in this case specifically by raising the loudness of the softer parts of the music to make the whole thing sound louder.
MP3 and AAC compression, as used in iTunes, doesn't do that at all: what it does is to reduce the data size of the music by both using standard lossless data compression methods and by taking advantage of psycho-acoustics, in that some sounds will mask (make inaudible) others if both are present at the same time. How noticeable MP3 compression is depends on the nature of the music being compressed and how severely it is compressed.
With regard to how the music sounds, MP3 and AAC compression aren't supposed to make the music sound different (any difference is considered a flaw in the process). Dynamic Range compression, on the other hand, IS supposed to make the music sound different: that's the whole point of doing it.
By introducing MP3 compression into the discussion, the article only confused matters. Dynamic range compression is aimed mainly at radio airplay: in general, the louder a song, the more it tends to capture listener's attention. This causes radio stations to compress everything they air in order to make their station louder and more attention-grabbing, and it causes producers to compress their music in order to make it louder and more attention-grabbing. These loudness wars began long before the iPod appeared on the scene and aren't being done because of it. Further, ripping all your music losslessly does nothing to fix it. Lossless compression may ensure that you don't make the music sound worse by introducing MP3 compression artifacts, but it isn't going to have any effect on problems caused by dynamic range compression in the original recording.