Occurred to me to use a 'hybrid' setup, with part of my library working the lossless way and part of my library using the same file for both applications:
Modified the iTunes File Key field to use the original filename for files in my iTunes Downloads folder and will exclude them from the handheld sync.
If(IsEqual(FilePath(),E:\Audio\iTunes Downloads, 8 ), [Filename], E:\iTunes Library\Replace(Replace(Replace(Replace(Replace(Replace(Replace(Replace(Replace(Replace(Replace(Replace(Replace([Artist]|||[Album],<,_),>,_),:,_),",_),\,_),//,_),?,_),*,_),|||,\),|,_)\Replace(Replace([Filename (name)],.ape,.mp3),.ac3,.mp3),.\,\),\\,\),\...,\) )