Maverick Jester
The Special One
... but you can't download lossless from iTunes, you can't do anything
Consider the purpose of buying music off of iTunes- to be accessible and portable across your Apple devices. ALAC lossless would compromise this by virtue of the larger file sizes. Also, how many people actually listen to lossless music? Most Apple consumers go with the most straightforward method for media consumption, which is probably iTunes Plus.
The additional problem, is that while DRM-free, providing lossless music under the same conditions was probably too big a pill for the music labels to swallow.