Apple Lossless is similar to flac, decodes to perfect stream like wav. I use dbpoweramp to transcode my flacs to Apple Lossless to go on my wife's iPod.
The mechanical HD in the classic is larger than the SSD. The SSD is good for shock resistance,if you jog with it, etc, but has more capacity than flash based player like nano. My wife has a iPod 5 classic, it is very nice.
Only get an ipod if you want the portability. It's analog output is not great. Ipod + modded Wadia should make good sound, but the price is getting up there. You still need to use the computer to get full value from the iPod. Instead of iTunes, you can use Red Chair software's Anapod to manage your iPod. It works great.
The demise of CDs is greatly overstated. It is currently the only way to purchase full resolution music in popular genre with a large library. Until higher speed internet connections are available to majority of music buyers, it will stay.
How 'bout using the computer with foobar (or other player software) to a great DAC? There are some nice DACs now for <$1000. Foobar is as easy as an iPod and more flexible.
CDP is still the easiest to use of all. A great DAC can make any cheap CDP sound great. Transport quality is irrelevant with a jitter eliminating DAC. The Prima Luna ProLogue8 is a great value CDP, as is used Raysonic.
Fun decision for you!