I'll take a crack at this. if you have itunes on 2 different computers on your lan, one copy of itunes can see the other (assuming both have the sharing enabled). from one copy of itunes you can open up a window with the files shared from the other instance. you can play them but that is about all, as far as I have seen. I don't think you can put them on an ipod or save them locally.
if you want to mimic this, you can put a directory/tree of directories containing recognizable music files on the 321. you can then point the itunes server at it, and turn the server on. then, from any computers on your lan, you can play the songs just as if they were shared by other itunes instances.
there always caveats...
* only certain file types are supported
* these file types are ones where they contain tags describe the music. you don't get the equivalent of the itunes library file where you can keep notes or tags for .wav files, for example.
* if the library is too big, the page on which you administer the itunes server messes up and you can no longer administer the itunes server, not to mention issues with the box itself when one or more parts died. danger, will robinson!
good luck and have fun!