The bottom line is good audio is in the ears of the listener. That said, I don't want this to sound negative, but I know it's gonna.
MP3 at any bitrate of sampling reduces the music content - a simple review of the standard will show it eliminates some bass and some treble tones no matter what bitrate/sampling is employed - no such thing as a free lunch.
A FM frequency transmitter can not deliver better sound than the FM section of the head unit. Think about the difference between an original CD and a FM radio playing the same song.
Improved sound (in a car) comes from these things, more or less in order from most important to least:
Source material (from DVD-level sound down to AM radio)
Speakers (and the way they are installed)
Head unit
Amplifier(s)
Cables & Wiring (assumes adequately sized/placed)
And drive....winning one tiny little skirmish doesn't mean you win the war 