Yeah, I certainly wouldn't stream FLAC files over 3g/4g. Wifi only. But that is still a huge plus since free wifi is pretty widely available when traveling.
The Seagate GoFlex Satellite that I have does local WiFi streaming well, I was using it with my 4S to listen to FLAC music via 8-player.
USB audio is working for me using a custom kernel and Micro II. Here is a link if you wanna try it out, I'd like to know what DAC's it works with.... http://androtransfer.com/poitee/Grouper/Kernel/poitee-grouper-v3.zip
Great find! about to give this kernel a try and see how it goes.
FYI mine is only working when I boot the device with the OTG cable already plugged in and the Micro 2 plugged into the OTG cable. If you boot without them plugged in then its not switching over. Its a work in progress that I asked the guy to try and this is his first attempt
Ah, I haven't tried booting it up with the cable connected yet... but usb audio tester now recognizes my fiio e17, so thats good news for the other people following this thread.
any sound yet, and does the usb logo pop up in the notifications?
no luck for me, and I haven't seen a usb notification either. The usb audio tester app is all I've had success with, and all that does is open the microphone and play the output through the usb device. However, it seems that we're on the right track, even if progress is slow.
I don't get the USB notification either. Only working when I boot OTG and Micro 2 plugged in, and I have to use analog out of the Micro 2, but hey its a start!

no luck for me, and I haven't seen a usb notification either. The usb audio tester app is all I've had success with, and all that does is open the microphone and play the output through the usb device. However, it seems that we're on the right track, even if progress is slow.
I have read that the Galaxy SIII doesn't work with the e17 either but works with the e7, so that may not be an issue on the device side. I now have digital out of the Micro 2 working, again only when the N7 is connected before booting, hopefully it will be fixed soon so that when the DAC is connected the N7 automatically switches over to USB and back when disconnected.
Nice, good to see a custom kernel bringing some usable USB audio!
Isnt that what StickMount is for? https://play.google.com/store/apps/details?id=eu.chainfire.stickmount
not sure if it works for N7.
Waiting for the UPS man to arrive today with my n7.