It should only cache files it needs to. So if the files can be dumped straight to the device they will not be cached. I'll look into it.
Still thinking this through....
Understood about not caching all files. It only needs to cache the files that need to be converted. In my case, the majority of the library is in APE format. Right now I really only have one device, but we are thinking about getting a small flash based device for activities that would be too much for a HD based device. Given that it would be non-critical listening and space is a concern I would use CBR or VBR @ ~128kbps.
For my big device (currently 60GB) I use VBR High Fast (in MC terminology).
What would the current system do with the files? Would it see an mp3 in the cache and just pass it along, or would it create a 'different' mp3. The easiest way to handle this (in my mind, but I don't have to code it or try to meet everyones needs) would be to use different directories for the different devices.
I see the following options:
Main central cache option (like you have now).
Device specific cache option to override central cache option (use caching for this device, and directory to use) with the default being to just follow the central cache options.
That way most single device users could just set the main options and go. Multi device users would have more flexibility if needed.