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The Momitsu page says it works with iTunes. What, exactly, does that mean?

According to the specs it does support AAC but I assume it means ones which don't have any DRM. I don't have any iTunes tracks to test this with. I know it works with MP3 anyway.

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Is the interface any good?

The interface is actually handled by the server software which presents it as a HTML page. It's got some extensions to handle specific features but it's pretty much standard HTML. There is a button to browse to a normal website as well. It doesn't do CSS, Java or Javascript unfortunately.

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Too bad about the damn DVD menus. I agree that, if it had them, then it would be a no-brainer.

Yep. That's one of the main annoyances. The third party server software understands the DVD IFO files so it can display a link for the titles at least.