For anyones interest:
I just swapped back over to OSX and thought I would try ALAC again, as I had real issues with them in the last firmware - not playing, freezing, ID tags not showing etc - making them unpredictable and thus unusable for me.
So far, on latest V3 firmware:
Not a problem, all tags showing (all info, genres etc, artwork showing), smooth and fast transitions between songs in different albums.
These were ALL converted from .flac, a mixture of 16/44 24/96, artwork at 500x500 px and occupying 61gig on a Sandisk Ultra 64gig microSD.
I'll keep listening and report, though it all seems VERY smooth, sounding great.