The limitation is only in what you want to play it back with, not what's available (and for free) to play it back with. Lots of things can play back AAC files. (.m4a could also be Apple Lossless, but not at 64kbps)
The bigger concern is that if you convert to MP3 first, then split tracks, they may get re-encoded a second time as the new tracks get created. Convert it to AIFF or WAVE before splitting if you want to avoid that with certainty.
Let your friend know that Griffin's free iTalk app, for example, on it's "best" quality setting will record a 16/44 AIFF file, limited only by AIFF's inherent 2GB file size limit, but because it'll be mono should last quite a while.