It does not use iTunes. In fact the only songs I own(mp3s) are ones that I got back in the days of Napster and stuff. As long as the song properties are such that the Zune software can find the albums and artists, then it works correctly. I have a couple of songs that I have not made the properties correct and they show up as unknown albums and such. You can get a Zune Pass which gives you unlimited song downloads and other features but I have yet to take that plunge. I think it is $14 a month. The Zune software is very nice actually. I am subscribed to many podcasts(Major Nelson, Bungie, 1Up, NPR, etc) and the software takes care of clearing out what I have listened to on my Zune and loading the next one on there. Searching for podcasts and such is quite well done as well, filtering by video/audio, content type, etc. The feature where the radio on the Zune detects what song is playing and by what artist is awesome and works perfectly. You can even select to add the song to a list for future reference or purchase. The wireless connection works great, with the only caveat being that I have to enter in my WEP key everytime I connect to my home network. There might be a way around this but I have yet to find it. The 3.0 features are great and are actually making me consider getting a Zune Pass.
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