Is there a way in which I can playback FLAC lossless files on iTunes and my iPod 5.5Gen? If not, could I convert it to the Apple Lossless format without losing quality in the conversion?
There are some third party FLAC plugins and programs. You need to pick your poison.
If the FLAC plugin is a QuickTime plugin then iTunes SHOULD play the file. However the iPod is a closed system and there is no way (short of reformatting the older iPod with iPod Linux) so Apple lossless or the raw file is your best bet.