I have used a make-selected-tracks-bookmarkable script from Matt's script archive [1] in the past. It is very simple to use. As above, you convert to AAC and then run the script. I think that all it does is change the extension.If you are using the latest version of iTunes though, iTunes and iPods now have the option to enable "remember playback position" on any song of any file type, individually.
[1] http://tinyurl.com/cmuur
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