Neat trick I picked up today from Mac OS X Hints

Enjoy it while it works! Apple could break it with an update at any time:

Convert iTMS songs to a DRM-free format without burning
Mon, Aug 14 '06 at 7:30AM PDT • Submitted by vaadkins
First of all, I have been reluctant to document this 'feature' on the internet, because it uses Apple's own software, and they have a way of making such 'features' disappear in future versions. In any event, here goes...

To remove the FairPlay protection from a purchased song, open up iMovie and start a new project. Now click on the Audio button, and drag any protected song from the song list onto the audio portion of the timeline. iMovie will then proceed to convert the song for use in the project. After iMovie has finished converting the song, click on the Photos button and drag a photo onto the movie portion of the timeline. (As of version 5.0, iMovie requires some sort of visuals to be present before exporting the project. Earlier versions did not have this requirement.)

After the photo finishes rendering, go to the File menu and click on Share. Click on the QuickTime tab and under the 'Compress Movie for' drop-down, select Expert Settings and then click the Share button.

A 'Save exported file as' dialog box will pop up. Under the Export drop-down menu, select the Sound to AIFF option, name the file as desired, and save the file to your desired location. After a couple of minutes of converting, you will have a DRM-free AIFF file. Take that file and import it into iTunes converting it to AAC, MP3, of whatever format your heart desires.

As far as sound quality goes, I am sure there is some loss of quality somewhere along the way, having done three conversions. However, I can't hear it, and I am sure it is a lot less than going from digital to analog back to digital again (as is the case with burning to CD and reimporting). Also, I am not sure if this works if you do not have QuickTime Pro, as I do have it.

As pointed out at Mac OS X hints, the original author is slightly mistaken - burning a CD is also digital to digital.

Personally, I like having the CD as a backup! But if you can't/don't want to burn, this is a good way to work around the DRM.