Broadcasting to a SHOUTcast server

AAC and Apple Lossless are definitely show stoppers with SHOUTcast. Same goes for protected AAC (iTMS music).

I've never tried AIFF, but if it works and you can spare the disc space, there's no harm in that. Audion has a very nice interface for broadcasting which lets you set the on-the-fly transcoding parameters, so your AIFFs become just like tiny MP3 files in real time without the original files themselves being altered in any way.

You can easily install and configure a SHOUTcast server and use Audion (it's been free for some time now) to handle the broadcasting. Very straightforward process. If you need further assistance with configuration, etc., just ask.

You won't need to duplicate your files in order to do this, but hopefully, for the sake of broadcasting to a SHOUTcast server, your files are in MP3 format. If you use the default AAC encoding in iTunes, then you would either have to transcode your songs or re-rip in MP3 format.

If your music is already in MP3 format, Audion will allow you to simply add directories to playlists, etc. so nothing gets copied in the process.