If you have the drive space, rip to FLAC, as it's a lossless format. Then you can store the cd's and hopefully never have to rip them again.
Use EAC and LAME for best ripping results.
The 3.0alpha5 software will play Ogg and FLAC but not Ape. Unless you are comfortable with alot of tinkering and software flashing, I wouldn't recommend using it yet though. Hopefully they'll have a 3 series beta soon that will be stable enough for daily use (not that alpha5 isn't, but the database rebuild bug is a killer.)
My recommendation would be to encode in VBR 192 or 256 for the greatest compatibility.
The empeg is only stereo. The front and rear outputs are simply for ability to fade sound from front to rear.
EDIT: The pebble remains...
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~ John