I'm not saying all CD recordings are great, but the topic is bitrate and if it improves CD quality.
Well that has to be split into a few other areas..
Lossy vs Lossless compression
Lossless is fairly straightforward as it simply decodes to a PCM signal at some point. i.e. a 16/24 bit signal at 44.1/88.2/96/176.4/192KHz.
Lossy gets a little more complex. Other things which need to be considered are constant bit rate (CBR) or variable bit rate (VBR). In theory a VBR file at the same bitrate as a CBR file should end up with better quality as data is prioritised for more complex wave forms. In CBR the same amount of data is used whether even if it is pure silence whereas this can be compressed for no quality loss far lower, while upping the bitrate above the average for something that is harder to compress and you get a more accurate waveform.
If you take a lossless format and apply lossy compression, the output HAS to be less accurate than the original. That said, it is theoretically possible that a high bitrate mp3 from a good source will sound better than a poorer quality PCM source. However, that's really a source issue. The main purpose of lossy compression though is decreasing the file size while trying to maintain as much quality as possible - but not all.
With Lossless Compression (i.e. flac) the filesize from the original PCM encoding will dbe roughly 50-60%. With lossless, a filesize of closer to 5-6% can be achieved (according to wiki anyway). Lossy compression is a tradeoff in other words.
Personally - data is so cheap now (or at least it will be again when HDD prices come back down) that storing audio as flac or another lossless format is standard for me. At 300-400MB per album rip, I don't think it makes sense to apply lossy compression especially considering the cost of a hard drive is fairly insignificant compared to audio hardware (works out at around 3-5c per lossless rip on a 1TB drive). It also has the other benefit that you can quickly transcode from the original lossless source to a lossy format as required - for example portable media players
