MP3 is MP3; if you're converting in iTunes the songs should play fine assuming the target system can read them, which based on what you're saying about filenames, is what my gut is telling me is the problem.
First, convert everything in iTunes. 192k joint stereo is a good baseline. Then create a new folder in Finder and open it, so you have an empty window. Go back to iTunes and search for "mp3"; this should leave you with only the mp3 versions listed in the iTunes window (it will list ALL the mp3s you have in your library, if you only want some, you need to make a playlist with just those tracks). Select everything in the iTunes window and drag-and-drop them to the empty folder (it helps if you shrink the iTunes window a bit and move it off to one side so you can see the empty Finder window peeking out from behind). Then copy that folder to your flash drive, it should work fine.
The files that start with "." aren't showing up in OSX or playing in the Subie because in Unix and Unix-like systems, which OSX is, files that start with a "." are invisible, meant to be seen and used only by the operating system at a low level. I suspect they contain specialized data about the songs that is only needed by iTunes and that would "break" the MP3 files if it were included directly. I'm not sure if exporting the files by drag-and-drop will also export the dotfiles; if it does you're going to need to get your hands a little dirtier to erase them. Let me know and I'll be happy to help!