Close but not good enough
Well claiming it's not CD quality because of the bit rate is an absurd technicality, going by listening quality is a fair test. But I'm a bit hessitant to say 128Kbit AAC is truly CD quality, but I will admit AAC quality per bit ratio is very high, right next to Ogg Vorbis.
If they had said 160Kbit or 196Kbit was equivalent to CD quality, I might be satisfied with that, but somehow this jusi smells of some kind of standard Apple created with iTunes.
So what's next, will 256Kbit AAC be called HD Audio?!