This isn't exactly hidden knowledge, but I'll detail the procedure here for posterity.
Take an audio file of any type (except FLAC HA HA) and import into iTunes. Easiest method is to simply drag it to the application.
Go to iTunes preferences and hit the import settings button. Set "import using" to "Apple Lossless"
Go to your iTunes library and locate the audio file you what to turn into a ringtone. control-click (or right mouse click, or however you invoke contextual menus on your machine) on the file and select "Create Apple Lossless version".
Contextually click on the newly created file and select "Show in finder"
Go to the finder and rename the files extension from .m4a to .m4r (r for ringtone)
Drag that file into iTunes. Now it appears under ringtones in the iTunes sidebar.
