A few years ago I successfully cracked .AA encryption via Lame & TotalRecorder, and converted the files to .mp3
That can not be reversed, so don't even try to convert anything to .AA
The problem is in the player and not necessarily the file format.
What we need is a simple player that allows bookmarks/tags to be placed on any of the files in a playlist so that when we open the playlist it will allow you to continue to play exacly where you left off, or failing that - it could at least have ability for you to write annotions on the file so that you can just type the time you left off at and perhaps whatever details about the part you're interested in to review later.
This would be a rather lucrative endeavor for anyone wishing to make some serious $$$$$ on a simple but highly desired program.
Maybe if I get the time I'll do it myself.