sdr, the original iPod uses Portalplayer's PP5002 chip, which can handle AAC and is firmware-upgradeable. An upgrade for older iPods (Mac only) will allow them to function with AAC downloads. Owners of PC-compatible iPods won't be able to upgrade to AAC, at least for the time being. To me, that seems to point to a proprietary Apple DRM embedded in release 1.4 of iTunes (replaced by Musicmatch in PC iPods).
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