The problem with this is that you're starting from a 128 Kbps file, transcoding it, then transcoding it again. I did the same thing a few times before 2009 and the results sounded pretty awful. Ok for a bog-standard car stereo or earbuds, I guess, but nothing more.
Anyone who still has a lot of locked files is probably best advised to pay for a one-year iTunes Match subscription, replace everything (and any matched sub-256 Kbps files in their collection) and make sure to turn auto-renew off, unless you actually find iTunes Match as a whole to be good value. (Which I think it can be for those who do a lot of mobile listening and have a good data plan. )
If you listen on decent speakers the 256 Kbps AAC files are still nowhere near CD or LP quality, but good enough for casual listening/background music.
On a related note, storage space is now so cheap there's no reason not to re-rip all your CDs in a lossless codec like FLAC or Apple Lossless.