I'd like to broadcast audio from my Mac desktop to my Palm Pre, as the Pre is more portable and I can use it in the kitchen, or while I'm exercising, and so on. I can already capture the audio using Soundflower, but how might I create an MP3 stream out of the audio input device?

For all intents and purposes, Soundflower can reduce this question down to, "How can I create an MP3 stream from the built-in microphone on my Mac?" as the answer can be applied equally well to iTunes output.