I agree with you entirely: requiring users to rewrite all of their playlists is not acceptable and needs to be fixed.
I'm an avid Linux user, and since I need to convert from Linux to Windoze anyways, it was easy for me to change my script to have all 60 files start with the file://localhost/... stuff. So, as a test, that's what I did.
Without re-explaining the whole thing again, I was trying to say that I ended up with an empty iTunes playlist even though the M3U playlist was accepted. My tip is: if you're trying to get iTunes to read your (modified) M3U's and you end up with an empty playlist: that may be because iTunes already 'knows' that playlist.
I do not have WinAmp installed, but I did notice that Windoze Media Player accepts the file://localhost/... format as well. Maybe, for the time being, conversion isn't totally bad. Consider using Notepad+ (an open source editor that will allow you to search and replace all of your 30 playlists in one go).