iTunes files are 256k AAC.  I doubt you could tell them from a CD in a double-blind test. The big problem these days is not bit-loss compression (the conversion to a lossy file format like MP3 or AAC), which can be quite transparent when done correctly. Rather it's *dynamic range* compression — the leveling off of peaks to achieve greater sonic density, i.e. perceived loudness. This generally happens during the final mastering phase of a recording, and affects all digital sources equally.  

Because a highly-compressed modern digital master is unpressable on vinyl,  vinyl releases are mastered less aggressively. This difference in mastering style accounts for almost all of the perceived superiority of analog/vinyl vs. digital/CD.  Digital files — even well-processed lossy files — can sound just as good as an analog recording. The fact that they don't is the fault of recording engineers, artists, managers, and labels who become enamored of "loudness" at the expense of nuance and/or just aren't very good at what they do.

There are many exceptions to this generalization (Norah Jones's "Come Away With Me" and the most recent Alison Krauss & Union Station recording are two that come to mind).  To my ears this recording is not particularly exceptional. It does have quite a bit more dynamic range than most modern rock recordings (especially in the drums) but a lot of the individual tracks in the mix are really squashed.