I’m sorry; I don’t know any free apps, but I can suggest two paid apps, if that’s any use.
There’s an app called Audiobook Wizard that I used a year or so ago, under Snow Leopard, that seemed reasonably fast and easy to use.
However, it’s a paid app ($4.99) offered through the Mac App Store: http://itunes.apple.com/us/app/audiobook-wizard/id460967298?mt=12. This is apparently Lion compatible and a decent audiobook editor. I haven’t tested this version though.
The developer also offers a free version, which can be downloaded from his site: http://www.audiobookwizard.com/. This only supports Snow Leopard and below, because it has PowerPC components, but you might like to download it to get a feel for the app.
There’s also Audiobook Builder. Again, this is a paid app ($5.99) in the Mac App Store: http://itunes.apple.com/us/app/audiobook-builder/id406226796?mt=12. I haven’t used this before, and I’m not sure if it’s Lion compatible. A cursory search of the forums on the developer’s website doesn’t find any problems, so it might be ok. Might be worth trying; not sure.
You’re right about
.m4b files. This isn’t so much a problem with iTunes, as the file types.
.m4b files have the capacity to “bookmark” parts of the file that
.m4a doesn’t. From the Wikipedia page on MPEG-4 Part 14:
Audio book and podcast files, which also contain metadata including chapter markers, images, and hyperlinks, can use the extension
.m4a, but more commonly use the
.m4b extension. An
.m4a audio file cannot "bookmark" (remember the last listening spot), whereas
.m4b extension files can.