Can iTunes change metadata on the actual CD?
Audio CDs contain no metadata at all. They are also incapable of being written to. 

The data, as @dwightk guessed, is stored locally after consulting the CDDB. If the 'album' in question has never correctly been reported to the CDDB, as is often the case for home recording or limited distributions, then it can make poor guesses. 

It was certainly possible at one time to correctly report an album back to CDDB to give them the correct data, but I haven't done this in 10 years or more &amp; no longer remember the procedure, sorry.
As far as I'm aware - again this is not something I can test right now, once iTunes has fetched the data from the CDDB, it then a)saves it to any converted MP3/AAC files it makes &amp; b) saves the 'original data' with a fingerprint to recognise the same CD if inserted again, so it doesn't have to perform the lookup in future.
Deleting this will only make it find the same incorrect data a second time, so your 'fix' is to get the CDDB updated with correct information. I would guess the data is stored inside the iTunes Library.xml, which is not a structure you can readily edit. Perhaps deleting the "CD" whilst it is inserted would clear the data &amp; make it consult the CDDB again, once their data has been corrected.

Late addition
I found this link which sets out how to send the data; it claims to work for iTunes but I cannot test it.
7 Steps To Add Your Songs To The CDDB Database


  
  Insert the CD (whether homemade, replicated or duplicated from a master image) in your computer CD drive  
  Do not import the CD yet  
  Select all the tracks, right click and select Get Info
  Click the Info tab and enter the album title, artist name, year and genre
  Right click in each song title fields (Track 1, Track 2, etc.) or double click to edit to  the individual track names. Double-check for
  typos and make sure you have the track order correct.
  When you are all done, click, OK.  
  If you want other users to also be able to see the correct album title, artist information, and track titles, highlight all the tracks
  again, go up to the top menu bar, and click Advanced / Submit Track
  Names to upload them to the CDDB Database. That’s it.  
  If you want the database update to happen a bit faster than a few days, repeat this process from another computer/iTunes account. This
  speeds the Gracenote “verification” process up because you are
  essentially “verifying” the database entry from another computer.