Hey Fred,
I love my headless Mac Mini (well not entirely headless, I do have video running to my TV). But it works great thru Screen Sharing to my MacBook and iPhone. Once the Mini is on your internet network, it'll appear in the Finder screen of the MacBook and you just need to click "Share Screen." Very simple (with maybe a permissions tweak here or there).
I believe that Max will allow the conversion to Apple Lossless.
For me, I went with Fidelia for music playback. Doesn't run thru iTunes and no problems at all with FLACs. When I was looking into playback software, I found Computer Audiophile forums to generally be the most helpful.
Not sure if you are going new or used on the Mac Mini, but I would get one that has an Intel chip, and 4GB of RAM at least. The Mac Minis prior to the aluminum unibody models all have an external power supply already, which might save you some money down the road. Not sure how unibody vs. non-unibody models compare for audio otherwise.