Recording CDs to iPhone - PC CD Drive vs Audio CD?

Ok, I've tried the various settings (Apple Lossless, Custom 320kbps, etc.) in iTunes and listened to the differences on the iPhone with earbuds and also with better headphones. I think I can hear/understand the tradeoffs on quality vs capacity requirements with the alernative settings.

What I don't have a grip on yet is what contribution the CD/DVD drive in the Personal Computer makes to the resulting sound quality - any, some, none? Is it just copying bits?

Along these lines, I have an Audio Research CD3MkII; is there some way to use the ARC CD player to play the CDs as I record them into iTunes? Would this approach improve the sound quality? If so, a little, medium, a lot?

Thanks for any advice on these matters or any insight on DACs, etc that might help form a recording strategy.
It can be done, but it's not what you're thinking. When you rip a CD in your computer drive you are generating a computer file (AIFF, WAV, MP3, etc.) while the output of your CD player, assuming it has a digital output, is a PCM data stream. It's possible to output the PCM stream into your computer using a software recording program which in turn would generate a computer file which can then be directly accessed by iTunes. To do this you would need a digital input on your computer. I suspect this method would generate a far amount of jitter in the signal. You would also have to do in real time.