I have written a simple script to bridge the gap between iTunes and the LAME command line encoder. It will automatically handle ID3 tags, and makes LAME quite a bit easier to use.
A previous hint has instructions for installing LAME.
This is the first version and hasn't been extensively tested by others, so any input would be appreciated.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20011210092939561