What are you using for headphones? Unless it's some nice phones then I don't see the purpose of filling an iPod with large files. If you have good cans, then I digress.
Personally, I've found that 320k is perfect for size and quality and I'm pumping my tunes via some Klipsch speakers. As far as renaming and tagging, I use AudioShell which works nicely. Of course everyone has their own idea what works best for them so with that....
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