I am no expert on this, but, as a general statement, I feel like the format the music is captured in should be separated from the issue of what format the playback device can actually handle. The idea is that the players will change over time, but there should be no need for you to re-rip your music. When I get around to it, I will probably look at a lossless open format, and FLAC/CUE seems like a possible way to go.
Now, for the playback, if the device does not support FLAC directly, there is always the possibility of transcoding. This is where my memory is fuzzy as to what format the DSM-510 supports, but I would think that, as FLAC is pretty much a raw uncompressed high bitrate wave form, would it be possible to look into something simple like wav, or LPCM?
FWIW, I am using mediatomb as a media server (under Debian GNU/Linux), and some work has been made towards transcoding of FLAC/CUE. Check it out. http://mediatomb.cc
Feel free to report your findings. I am interested in this, too.