With iTunes 6, I would highlight a track, right-click and select Show in Finder from the pop-up menu. Then I would drag the tracks to Toast. Now in iTunes 7, I can just drag the Album Art box (whether there is artwork or not) to the Toast window and it is all done for me.
[robg adds: I don't have Toast, so I can't verify this one. I did try dragging the artwork to a Burn Folder in the Finder, but that just resulted in a picture clipping, as you might expect.]

