You're right I should have done some research. The PS3 doesn't support lossless WMA. Actually, doesn't look like it supports any lossless format. I don't listen to lossless much and if I do it's through my PC and not my PS3.
Looks like people have been complaining about this for a while. Seems odd Sony hasn't fixed this. Should have stuck some devs on this instead of Home. :)
Bryan