I found a nice post about a quick way of converting the AAC files to an MP3 in iTunes. It is the 5th post by jameskhog.

http://boardsus.playstation.com/t5/PlayS...P3/m-p/33575535

So now that you have a duplicate MP3 in iTunes you can right click on that song and select "show in windows explorer." Copy that file onto a flash drive and then the PS3 will be able to read the song and artist info and display the cover art. Don't forget to change back the importing songs from cd's to AAC lossless rather than MP3 or else you will be importing songs at a terrible quality.

Interesting.
Another way would be to use TVersity as your streaming server on the PC as it has a filter for streaming AAC files to your PS3 or other device.

The initial intent was to put together a quick playlist, from my iTunes library, to use on the PS3 as background music in racing games. I've found some other long and drawn out approaches to this, but this seems to be very quick to do it.

As far as streaming, is it possible to have the PS3 play something streamed from your PC as background music in games? If that is the case I'd just use Pandora, since that would be better than anybody's iTunes library.

No, games which support custom soundtracks can only make use of files stored locally on the hard drive. Although an easy way to get everything over is by coping shared folders across the network.