Hey Tim! dbpoweramp can convert flac to mp4 (Apple Lossless). It has a batch converter than can select tracks from multiple directories, so you can program the entire library conversion in one batch down to the track level. It does not go get art during the conversion, but most players can see your art.jpg files if they are in the directory along with the tracks. Just copy and past art from your flac directory. Art is not stored in the song files. I don't know where iPod likes to find its art files. Maybe iTunes can help with that.
It will only convert one format at a time, and won't compress a ripped wav to flac and mp4 at the same time. So you would rip and compress to flac, then convert the flac to mp4 with one of the 2 converters, depending on how many directories need convertin'.
Rich