Where is "Convert to AAC…" in iTunes 11 (and 12)?
It does, but it's a little hard to find. It's under File -> Create New Version. You still need to hold the Option key. But the difference in iTunes 11 (and 12) is that you have to make sure no songs are selected when you perform the menu selection. If a song is selected iTunes will attempt to create an AAC version of the selected song. If nothing is selected you can select audio files to convert to AAC.