How can I use files purchased from iTunes as source files for audio
mixes? They seem to be encrypted or protected or otherwise hostile to
conversion software.

I once heard the that if you burned the songs to a cd- and then tried
to use them- from the newly burned cd- that they lose some of their
restrcitions.  I have never tried this though - I did discover what
you are talking about with Garageband- you can't use songs purchased
from itunes in it- only ripped from your own CD's.

Here you go:

http://www.bpurcell.org/blog/index.cfm?mode=entry&entry=1036

i know that this is expired but, if you want them in mp3 format you
gotta get itunes version 4.6, than, go to this website
http://www.gates-of-hell.com/Tutorials/m4p%20to%20mp3.asp
and do what they tell you to. This makes the m4p(encrypted) into mp3 format

If you need to bring the stereo file into Logic or Peak etc etc .. 
Just Set the Default sound output to Digital out (assuming you have a
G5 - and wire the digi out to in) - Hit play in itunes and just record
it back into your ecording software in realtime.