I had heard of Rockbox, but have never used it. Although the forums are filled with users reporting problems (as most software is), much of that was about older software versions and iPod models. It has apparently evolved over the past few years to be easier to install and use than ever. I believe support for the 80GB iPod was added in mid 2007.
If you go with Apple Lossless, the proprietary file format will limit you in using other software players and equipment. The Logitech Squeezebox variants can use the FLAC files, but not Apple Lossless.
On the other hand, I'm currently using iTunes and .wav files on my PC, and stream wirelessly to three remote Airport Express locations. The Airport Express go for about ~$50 used, so it was very economical.
I am using the .wav file format (not concerned with saving space for iPod use), because I didn't know if I might change player or hardware platforms and not be able to use the Apple Lossless files. Using .wav files under iTunes, I have all of the tags and artwork, but I would loose that if I used them with another platform, as that information is stored in the iTunes database and not in the file header.
Of course, if you have the extra hard drive space, your song files can be converted to another format using either iTunes, EAC or dbpoweramp, but sometimes loss of file tags can occur, and you never really know about the conversion process. It's better to have a good idea what direction you want to go before ripping hundreds of albums.
Decisions, decisions! Good luck!
Steve