Idk man. Show someone some cymbals on a 128kbps track and it sounds like someone crumpling a plastic bag via a tin can connected to a string. In contrast flac is going to sound much more natural.
I'd agree with you regarding 320 and flac - most people are gonna have a hard time differentiating.
I think they might get sued because as a publicly traded company they're beholden to shareholders (I agree with you)