How to take music from cassette tapes to iPod
Solution 1:
I'm afraid there is no alternative without playing the full length of the cassette. Since it's an analog signal, you can't just move a file from the cassette to your Mac... If you want to convert your VHS to DVD, you have to play your entire tape too because it's a analog signal.
But I'm sure, since you care so much about the music, you won't bother listen (and enjoy!) the cassettes one last time on your walkman while recording them to your Mac.
I've done this with my collection of cassettes a few years ago, and I must say, it was a true delight to listen them once more with the "cassette noise"! Now I can enjoy this lovely music everywhere I want!
So, do as you thought and enjoy your music!
Solution 2:
For step 3, I'd recommend Rogue Amoeba's Audio Hijack Pro which has the ability to break up the incoming audio into tracks for you and import it directly into iTunes.
But otherwise, you've got to do pretty much exactly what you planned to do.
Solution 3:
There are a number of cassette tape decks with USB ports on them now that can make this process a little smoother. The advantage to going with a USB-enabled deck is you don't have to worry about output levels. Or more specifically, you don't have to worry about clipping the input to your Mac with a too hot analog output from the tape deck.
With your approach you'd need to scan every tape, look for the peak level, and make certain the output level of the deck didn't clip the input when it played through that peak level. That's a time consuming process. The USB-enabled decks let you gloss over that.
Looking around, it appears that ION makes the most popular line of decks for this purpose, thought I can't personally speak to their quality. It is listed as plug-and-play on Mac though their minimum version is 10.4, so I'd check with them to make sure they support the CoreAudio changes in 10.7.x before buying. They make software that will connect to the deck and automate the extraction and splitting process for you. It doesn't mention if the software can play the tape back at a fast-than-realtime speed. Probably it cannot. So your transfer is going to be limited to realtime.
Once it's in iTunes, Match should do its thing and upgrade the tracks.