Yes, you can get high quality out of the empeg. You can't expect absolutely bit-for-bit perfect soundstaging from a data-compressed MP3, but if you use a high bitrate with a good encoder then you get darn close. On very high quality equipment, you personally would not be able to tell the difference between MP3 and the original uncompressed wave data. You'll need to re-rip at something higher than 128/160 though.

There is nothing wrong with spending money on high quality speakers and amplifiers for a car stereo, regardless of whether you're playing original CDs or MP3s. Low quality car speakers and amplifiers are genuinely crappy sounding no matter what you put through them, and high quality components will sound better than low quality ones no matter what you put through them.

Your only real question should be... How much do I like to listen to music in my car, and how much time to I intend to spend doing it?

For me, personally, my car is where I spend the most time not only listening to music, but paying attention to the music instead of just having it drone in the background. So it's important to me to have high quality components in the car.