I have heard that itunes automatically compresses all music that you put on the ipod to a certain bitrate. Is this true? If so, can it be bypassed/turned off?
Not unless you have it set to do so.

You can put up to 320 kb/s MP3s on it, or lossless m4a files on it, with no compression whatsoever.
Play the man, Master Ridley; we shall this day light such a candle, by God's grace, in England, as I trust shall never be put out.
Haha, ok, thanks. My mate has this thing where he has to disagree with everything I say, that's all. I'm getting a 120GB ipod cause my Zen was stolen, and I mentioned it to him and now he hates ipods, even though he has a shuffle lol.

Thanks guys, he had me worrying a bit there.