Thanks for the info, jtbse. Indeed, the file format does affect iTunes’ ability to play back gaplessly over the network; I tested a few Apple Lossless files and they played back perfectly. Some AAC files seemed to as well, but others had a small but noticeable hiccup during transitions.
The problem is that I’m in the process of encoding all of my CDs (around 1,000) and have done most of the process using a LAME VBR=0 scheme, thinking that I was getting a good compromise between file compatibility, audio quality, and file size. As I said, I’m using iTunes on a Mac, so FLAC isn’t an option (files are too large anyway), and Apple Lossless files are too big and not compatible with anything but iTunes. 🙁
I’m guessing that I’m SOL until Apple updates iTunes to perform it’s seamless track transition ‘voodoo’ on files served via Firefly or any other shared library. Would that be your assumption as well?