I've just started converting a lot of my stuff to AAC so hopefully I can save you the hours I spent reading online threads and debates.
1. Apple's AAC encoder is considered to be the best there is, so use that if you can (downside is that it will require iTunes, or at least part of it, to be installed). If you want to avoid iTunes, Nero is the best freely available encoder that doesn't require tracking down morally dubious encoders that use non-GPL code. At high enough bitrates the choice of encoder becomes less important anyway.
2. If you're not overly concerned about file sizes, there's no reason not to use VBR.
The best bitrate you should work out for yourself. With a good AAC encoder, I can't tell the difference as low as 128kbps, but I made a deliberate trade-off for smaller file sizes too. Anything above 192kbps should be transparent unless you have specific audiophile requirements. The iTunes store encodes their tracks at 256kbps if you want to match that.
Usual caveats apply: Your ears are different to my ears, your equipment is different to my equipment etc.
I don't work with hi-res files so I don't know if you need to do anything special for those.
Bee excellent to each other...