Audio quality is a big issue, and one that can indeed be improved upon.
The 128kbps mp3 listed as CD quality was inaccurate and has been fixed to no longer be listed as such. Thanks for pointing that out.
As for a lossy to lossy conversion, if the end user would like the file as an mp3 ( which the vast majority do ), then re-encoding is the forced route. That said, you're not the first to suggest adding the capability to download the original demuxed AAC audio stream ( where applicable ), and just such a feature is in the pipeline to be included in a later release :). And if curious, the lower quality YouTube streams ( formats 5 and 6 ) have mp3 audio streams while the higher quality videos ( formats 34, 18, 22, etc ) have AAC audio streams.
But the audio quality on YouTube is frequently iffy to begin with, where for many videos their audio streams are already n-th generation re-encodings of some original file. Thus, if one is an audiophile or would like a truly 'high quality' version of some audio, YouTube probably isn't the best place to go to begin with.
Thanks again so much for your feedback; and please don't hesitate to voice any other ideas, suggestions, or concerns!