You can have an ALAC file as the source, but they are converted to lossy when you sync (you can chose from several bitrates (128, 192 or 256).
If you WANT them down-converted they will be converted, it's a selectable setting. iPods are 100% compatible with lossless ALAC files.
Really? I had no idea. I will have to figure this out ...
OK, is it as simple as unchecking the "Convert higher bit songs to ..." box when you are copying an ALAC file?