AA 3 can use VSTs
mixing down is different then converting from one audio format to another
MP3 will always discard significant audio data . . . it is inevitable and unavoidable. As to which settings and which conversion program produces the best results . . . that is a subjective crap shoot
LAME variable bit . . . targeting 320 kb/s (though with variable it won't be exact) gets you in neighborhood of indistinguishable from audio CD for most listeners
but variable bit rate conversion is not supported universally by consumer playback devices
As to how good AAs MP3 conversion is compared to other options I don't really have an opinion. I will use it for ease of use for material going into mobile listening (car, jogging, etc.) If a client wants me to do MP3s for some reason I still tend to use the Lame encoder . . . variable bit rate if their playback supports it, 320 kbps static conversion if not, and almost never anything lower then 160 kbps
but audio is always archived in a lossless (i.e. wav) format