Individually, I think the act of burning your .m4p (iTS downloaded files) as an audio CD, and ripping cd's to your hard drive are legal.
The problem is that when you do it for the purpose of getting rid of DRM, it is copyright circumvention. I did a little homework on it (which I don't even do in real life). In the DMCA, under the Technological Protection and Copyright Management Systems section (page 3), it says :
''...obligating member states to prevent circumvention of technological measures used to protect copyrighted works, and to prevent tampering with the integrity of copyright management information.''
The iTunes files are encrypted with Fairplay DRM.
You have a license to burn those files to unencrypted CDs.
Importing an unencrypted CD is not circumvention and is generally considered fair use.
Apple's (and your) trade off is that when you are importing back into itunes, it is lossy. It is no longer a perfect digital copy of either the original album or the lossy music store purchase.