I've converted a few normal .aiff files to .m4a (AAC) and tried to play them back on another Mac (iTunes sharing).
The songs simply don't start and after choosing another song, an exclamation mark appears next to the unplayable songs.
If I encode the same files to .mp3, apple lossles or AAC (using iTunes), it works without a problem. Ripping a CD to AAC works as well.