The iTunes LP is Apple's attempt to recreate the "feel" of buying a physical record in an intangible format. Without lossless audio as a part of the package, though, iTunes LPs are much less than an album.
If Apple really wants to recreate that "feel" of buying a record, I have to feel like I'm buying something that isn't just higher quality, but also permanent. If I buy a lossy AAC file from the iTunes store today, not only do I know that it's inferior to the same $15 CD, but also that I'll have to chuck it once AAC is put out to pasture.
Together with all of the liner notes, lyric books and photos, lossless files could perfectly replace CDs (assuming they're properly backed up). In the future, if needed, I could transcode these lossless downloads into any lossy compression format that comes along. Apple Lossless in the iTunes Store would offer all the convenience of digital downloads along with the permanency of CD quality audio. If it ever happened, I would never need to buy a CD again.
Unfortunately, that last part is exactly why lossless audio isn't included as part of the iTunes LP package. The labels know that once they give customers lossless audio in online music stores, they'll have reached the point of no return. As popular as iTunes may be, CD sales still make up the majority of music purchases. The record companies are understandably scared to let go of their last strong foothold in the industry and give Apple even more leverage.
As a result, I don't think it's Apple's fault that lossless audio isn't available in the iTunes store. The iTunes Producer software labels use to create files for download on iTunes has supposedly had an option to encode in Apple Lossless since 2006. Apple would probably love to offer lossless files at a premium, just like they originally did with iTunes Plus. But then record companies would probably want that content triple-wrapped in DRM. Until the record companies stop making money off of the CD, we won't see a big move to lossless.
CD quality lossless audio would just be the beginning. Really, the ultimate archival format would be 24-bit, 96KHz tracks, maybe even 192KHz someday. That might sound crazy, but it's out there. HDTracks has Alison Krauss and Robert Plant's album Raising Sand available in DRM-free, 24-bit, 96KHz FLAC files. The price? $16, one dollar less than some iTunes LPs that include 256Kbps AAC files. Obviously, for 99.99% of the population, mastering-quality FLAC files are overkill for everyday listening. From an archival perspective, though, it's not unreasonable. And as scary as it may seem to manage such a huge library of lossless files, it's totally doable.
As it stands, iTunes LPs are a bunch of compressed AAC files with music videos and lyrics attached (Haven't they been adding videos, bonus tracks and more to cheaper albums on iTunes forever?). For some, that's fine. But for me, if I'm going to pay $17 for a digital album, I need to get everything the $15 CD version offers and then some.
I was hoping today would be the day I could start buying music on iTunes. But until Apple or Amazon or any of the other major online music stores offer lossless audio downloads, I'm stuck clinging desperately to the sinking ship that is physical media.
And once lossless audio becomes the norm, I can't wait for everyone to start complaining the inadequacy of CD-quality downloaded audio.