Step 4Sync!
The other cool thing about the "For iPod" playlist is that it allows you to manage your iPod even when your iPod isn't connected. Nothing will happen until you connect your iPod of course. But by using the "For iPod" playlist, you can add a new album or delete an old one anytime you're using iTunes and all your changes will synchronize the next time you connect your iPod.
Also, don't feel like you can only use ratings for music you don't like. Go ahead and give music you really like high ratings. Then later on you can make smart playlists based on these ratings. Here's a great primer on Smart Playlists by Andy Budd that's absolutely inspiring.
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