In terms of the iPod and it's software you have to realise that Apple view them as one product. If you look at the adverts they end by mentioning iPod + iTunes. Apple's goal is to have one seamless experience, they don't want it to be viewed as you connecting a device to a computer, then having to get the software to work with it and so on. With a DVD player you don't just put in a disc and play it, Apple want you to see iTunes as an extension of the iPod but on a bigger screen with more options etc.
If you don't like their combined solution then fine, choose something else and tailor your own solution combining hardware and software as you see fit. There is nothing wrong with either route.
I would also add that it's not Apple's AAC format. Anyone can use AAC, AAC is essentially MP4. Fairplay is Apple's DRM which they happen to use with AAC for the iTunes music store, just like playsforsure is Microsoft's DRM which they happen to use with their own WMA. Apple have heavily promoted and helped in the development of AAC but it is by no means solely "theirs".