Do the songs HAVE to be compressed, or can you transfer them to the ipod
at
CD quality?

HAVE To? No. But it's often quite a bit more desirable to use compression
as it takes considerably less space. For what's arguably a wasted amount of
"better" fidelity. There's just not enough difference to hear on the
headphones or in a vehicle/boat. Sure, the audiophiles will make all sorts
of arguments about 'quality' but they're largely talking outta their ass.

I'll trade the choice of faster loading, putting more on the device and
having decent fidelity over any so-called purist arguments any day.