The nice thing about FLAC and OGG is that they are open source. LAME is quasi-legal in that you can grab the source, but not binaries. I forget the reasoning. So, regardless, you could sell in both FLAC or MP3. The thing is, a lot of digital playback technology does not support FLAC and a consumer might want something ready to play on their rig out of the box so to speak.

As for your comment about 128kbit being sold, it's a non-issue. The only places I've heard about doing this are piracy fronts selling their Kazaa stock. Especially for what we are discussing trying to do here, there'd be no reason not to encode in 320kbit as we'd have access to originals and the time it takes to encode either a 128 or a 320 is not distinguishable by human on most machines. In addition, various software exists for unix/linux which can pull out the information from MP3s, including the bitrate at which it is encoded. The interface could be designed to show the bitrate of any MP3 that is for sale. But, even that would be overkill. Nobody has any significant reason to sell 128kbit MP3s if they are the original author/owner since, in the end, a 320kbit VBR version is only about twice as large in file size generally.