Stan,
Your situation and approach is almost identical to mine. I just finished TODAY replacing all of the low-res cover art on my 14,000 song library with hi-res cover art. This took me over a month of long, tedious work. I, too, am a Mac user.
When you import your iTunes library to the BM5/BS5 via BeoConnect (the software for the Mac), the embedded art will automatically stay with the tracks. However, you will be shocked at how HORRIBLE the default cover art that iTunes fetches looks on your BS5. This is not something that we notice in iTunes or on a small iPod screen. Sadly, nearly ALL of your cover art will need to be replaced. The exception to this is music purchased through the iTunes music store, which is often 600 x 600 dpi.
You will want to replace your cover art with 500 x 500 or high resolution if possible. If you do this editing in iTunes prior to the transfer via BeoConnect, that is great. If you do it after the transfer, the only way to edit the content on the BM5/BS5 is from Windows mode using the BeoPlayer software on Windows. I know...windows...ugh. The BeoPlayer software is really ideally suited to doing this post-transfer editing. The program will scan the BM5 and will show all of the content, meta data, and cover art well-organized. Then, from the Album view mode, you right click on the album and select "remove cover." BeoPlayer will remotely strip the cover art from the music of that album on the BM5/BS5. Sadly, the computer takes quite some time to do this. Usually several minutes per album. After the cover art has been stripped, you can then drag and drop your new cover art jpg file to that album. The embedding of cover art goes much faster than the stripping.
I found that the best strategy is to create a folder on your hard drive to store the cover art jpg files until you are ready to embed them. This way, you have a way to easily search to see what the resolution is of any given cover art later. As you gain practice will searching for high-resolution cover art, you will find that you become more and more skilled at finding higher and higher resolutions. You will likely want to go back and replace some cover art later.
I found that the best place to search first for higher resolution cover art is Amazon. Most newer music and certainly all music available as mp3 download on Amazon is in 500 x 500 dpi. However, you'll find that quite a lot of music has less than 500 x 500 dpi cover art. For those, be sure to check the "see all customer images" underneath the cover art if that option is available. Very often, people will upload their own 500 x 500 dpi cover art in that area. It seems that 500 x 500 is the limit on Amazon. Some other sites can offer around 600 x 600 cover art. When you are having trouble finding good cover art, you might try googling "[the name of the album] images" or "[the name of the album] cd images."
There is no way to convert Apple Lossless to WMA Lossless. However, iTunes can do the reverse and convert WMA Lossless to Apple Lossless. Therefore, I am re-ripping music in Windows mode to WMA Lossless. Once I am finished, I can let iTunes batch-convert all of the WMA Lossless to Apple Lossless for my Mac. Like you, I have taking my time and just re-ripping chosen favorites whenever I have the time.
Good luck!