I need to edit an mp3 file in itunes. Here's what I need to do:
I have a long mp3 file (1.5 hrs long)
I need to cut some of it, add and extend pauses and once edited, put it together into one continious track (with extended pauses in between) and burn it.

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How could I edit it, add pauses and put it together into one mp3 file? Any ideas on what software I could use, or could I use itunes?
iTunes is a media player, not an editor. You can use Audacity to chop up your file, move the pieces around, insert silence, and much more. It is a free, open source program, you can download it at http://audacity.sourceforge.net/
When you are done, you can export the file as a wav or download the mp3 encoder for Audacity and export as an mp3, if it has to be an mp3.