Streaming in AAC provides the same or even better sound quality to Mp3 whilst streaming at a lower bitrate. So as an example, streaming in AAC at 96kbps would sound as good as, if not slightly better than, streaming in Mp3 at 128kbps. So your ears must be deceiving you! Have a read up on AAC, it is definitely a better format.
In the past quite a few media players (and some web browsers - i.e Internet Explorer) did not support AAC very well, but most do nowadays. The HTML5 player provided in your Widgets section supports AAC fine.