Okay, I am making a change from a lower quality sound system to a much higher end system, and I have been using Itunes primarily for downloading music because my grandparents keep giving me Itunes cards for christmas/Birthdays/etc. The main problem is Itunes audio files all have a bit rate of 256 kbps. I would prefer to get 320kbps or lossless formats of the songs that I already own.

The point is: is it legal to get higher quality formats of already purchased songs for free? All of the information that I could find was last updated during the time of music DRM. I think it may be a gray area.

It's not a gray area, it is illegal (unless the music has been released for free in the format you are after).

While it's nice that you checked first, given the very strict rules we have concerning media piracy this isn't an acceptable topic of discussion on the forums.