I'm not sure if this answers your questions specifically or not, but here goes.
I convert a lot of my FLAC files to ALAC (Apple lossless files). The highest bit rate I have in my iTunes is 1411 kbps and it plays fine on this app. Also, I just happened to notice this while I was listening to some music tonight, if I view the album artwork instead of the EQ settings on my iPad, it happened to display the lyrics just to the right of the album cover. This isn't something that I look for so unfortunately I have no idea how to import lyrics or if this is something that most files have.
I'm not sure if this helps at all. I feel this is going a bit off topic on this thread, so to try and bring it back on track, if anyone has uses this app and has a set of Crossfade LP2's, I'd be more than happy to share some of my EQ settings!