Hmm, I had basically understood so even before your EDIT, I don't think that's at the core of my confusion, but obviously there is some miscommunication somewhere.
I'll try to describe how I understand whatever I do (correctly or not) and hope you could then confirm or correct me:
You refer to the server part which is followed by a command involving aplay.
Later you refer to the client, followed by a command involving arecord.
In my interpretation the server is the box where the sound originates from, e.g. a box where flashplayer would play in a browser well, but this box itself producing crappy or no sound.
The client would be the box where the sound output is desired to be redirected to, e.g. a box of generally lower specs but with a good soundcard and good speakers, producing desirable sound output.
Now in my personal simple linguistics and logics, lacking the full technical knowledge, I would imagine that the sound has to be recorded (e.g. ossrecord) on the box where e.g. the flashplayer is running, and to be played (e.g. ossplay) on the box where output of sound is desired. But the way I read all the instructions, it appears to me to be the other way round.
At least after your last editing I think to understand a tad more about the purpose of a loop device.
Sorry if I am persisting, but I actually had researched since long but casually about achieving this goal before you first posted about it, but then your post somehow inspired me to pursue this purpose with more intensity.