There is some discussion of methods of dealing with different versions of the same album, in the following thread:
http://yabb.jriver.com/interact/index.php?topic=78390.0When using the setup I describe in that thread, I then define a Keyword called "Superseded".
When I have compared different releases of an album, and determine that one is best, I tick the "Superseded" Keyword for all the others.
Then, in my Views, in "Rules for Display", I have "Keyword is not Superseded".
( NOTE that when using this in a general sense - beyond your example of MP3 vs FLAC - my experience is that the best sounding version is NOT always the most high resolution version, and is usually not the most recent release. This is because analog master tapes deteriorate over time and lose magnetism. That loss is greater than the improvements in mastering technology. So my overall findings - which vary depending on the release:
* Blue Note label releases are best on the 24/192 HD-Tracks release.
* Other pre-1980 recordings are usually best on the earliest CD pressing (contrary to the hype that all the early ones were done wrong and they had to be re-done).
* CDs of "original master tapes" are often worse than CDs mastered from studio copies, because the original master tapes were often subsequently played over and over to generate new releases of popular albums. The wear is often worse than the single generation. (a good example is Close to the Edge.)
* CDs that were released at the time of the album release are invariably better than later versions (a good example is REM).
* And all the above can be totally different from some particular album, no rule applies absolutely.