Yes They separate the elements in a gstreamer pipeline. Looks strange, you're right.

I just copied this from the gstreamer documentation, guess it's necessary if sample format and sample rate of source and sink do not match. But I tried without those two, works also well.

Some additonal observations:

• Putting the device to offline mode helps
• One should plug in the headphones, because else a highpass filter is applied to protect the speakers, which degrades sound quality and steals some cpu time
• Lock the screen
• it may help (not tested) to give some gstreamer processes higher priority

The first two points reduced the stuttering quite a lot, so probably on an overclocked n900 it will be perfectly fine. But any activity (task switching, using of player interface) leads to drop-outs (at least here). So increasing task priority or some audio buffer size(? but how) could help. Oh, and you'll need to install the gstreamer0.10-alsa package if you didn't already.