I stumbled across this site:
http://www.r3mix.net which has tons of details about encoders, etc.
They had a recommended encoding rate for LAME which I'm using under RH Linux 7.2. It's --r3mix -b 112. This does VBR encoding with 112 Byte as the minimum. It also applies a ton of other options that are listed on the above site. It takes quite a bit more horsepower than straight 320KB encoding but it really improves space usage to quality ratio.
I cannot tell the difference from the MP3 that is made and the CD on the same audio equipment. It's quite good. The file sizes are managable as well. I have at the moment 1285 songs from my collection on the Rio Car unit and have only used about 6GB of space. Wide variety of music. Green Day, Alanis Morrisette, Classical, Eny, Clannad, etc. Does sound qiute wonderful.
Now to get this thing installed in the car.