This is most likely addressed some place, but I've not found it in a few searches, so I'm raising my hand here.
I have approx. 1 TB of music I keep on an outboard HD that feeds my Mach2Music macmini. The music files are all AIFF uncompressed format. I refer to this as my "Master Music Library" HD. This is part of a dedicated 2 channel music only system.
In our household we have roughly 10 other apple devices (imacs, ipad, iphones and assorted ipods). Given the typical use of these other devices (wife and teens and car stereo) and their limited HD sizes, I want to provide a compressed version of the music library to use for these devices playlists and to keep my "master" music HD out of their influence.
I think I would like to set up an independent music library with a compressed file format (with reasonably good sound quality, say something at least around the 256kbps range). I will also be using this compressed library for my headphones and car stereo hd. We don't use any windows products, so no concerns with their compatibility.
Question #1I could use some input on which compressed file format to use.
My current preference is to use Apple Lossless or AAC(MPEG4). In my initial searching, I was thinking that using Apple Lossless would be adquate. But, looking at this music file format comparison screen, I'm perplexed.

The Apple Lossless would probably work fine for my car and headphone ipods, but not quiet enough compression for the other family devices (8GB to 16GB portable devices)
Is there a reasonable compression format some where between the Apple Lossless (33% compression) and the AAC (90% compression)?
Question #2What is the best way to provide this compressed file format music library for everyone to access?
I have a spare 1 TB drive available and was just thinking of cloning my master music files to it by importing them in the new compressed format. Then have the new compressed format drive attached to our office iMac to act as a central server iTune music hub. Set it up for local sharing so the kids iMacs can link to it for their use. Is that a good approach?
Thanks
Kenreau