You can't enlarge the album art, that I can tell. I put on an MP3 file with embedded cover art and it displayed the cover art. Perhaps with flac it has to have the cover art embedded into it as well.
I'm not sure what apps I would need to put files on it via wifi. It's drag and drop to load files via USB, very easy. Also not sure what apps you'd need to stream music over the network. Pandora works fine, although the volume control is problematic, it's much quieter in Pandora (the volume) vs. the music player. I'm not experienced at all with Android, but there's certainly a lot of potential there. Stuff like Angry Birds and World of Goo work fine.
To get the volume up when using Pandora (or any other website) you need to raise the media volume setting located in the global setting menu. It was set very low by default. I set mine to about 80% and the now the volume pretty much matches the player volume.
There is an app called "No Lock" which I have on my other Android devices. You can set it to bypass the lock screen, which is very handy.