Well, I've finally got my wavefinder working - replaced the stock PSU with a better one, and used a 'crack' on the drivers to improve stability and now it seems to work. Anyway, incase anyone doesn't know the Psion wavefinder is a USB digital radio receiver, and yes it can do direct digital off-air capture - you can also stream the audio on demand via HTTP, although I doubt that my DSL would cope with the ATOT effect.
Radio 4 is broadcast as 128 kbps MPEG (mp2). While winamp will play such files as is, not a lot else will.
I've been experimenting with LAME, and set to the highest-but-one quality VBR mode I get approx 128 kbps MP3 which is not audibly different to the original MP2. Presumably, this works because the lossy stages are very similar for the 2 algrorithms, so the files recompress into MP3 very easily.