I'm going to join the fray and suggest WavPack
- It's reasonably fast.
- It supports both lossless and lossy modes. This could solve the bandwidth issues for folks on slow/busy networks (or setups where the SoundBridge and server are both wireless). Transcode everything to WavPack; if the network is slow, transcode to lossy WavPack.
- It's open-source, it uses public-domain algorithms, and it's BSD licensed.
I figure that since anybody with Vorbis or FLAC audio in their library is able to transcode anyway (they have to serve it with Firefly), the best thing to do would be to shrink that transcoded stream down. WavPack probably gives you the most flexibility in that respect.
Apple lossless is probably the most immediately useful codec, as people with ALAC libraries may be serving with iTunes.
It's a thought, anyway.
EDIT: Vorbis radio would be nice, though... Although if firefly could provide some kind of vorbis->wavpack proxy service...