Just got the app (literally), still having a bit of trouble setting it up like I need- but that's another story.
Add my vote to the above suggestion. I found this thread because I wanted to find out if the lyrics source could be controlled.
Some folks (like me) also keep lyrics in a text file. makes it a lot easier to maintain. Anyway I was looking at it (the screen) and thinking that area to the left of the chat bar (where you can show a message and where the ads are shown) would be a great spot to put lyrics. Wouldn't require an extra click or an art obscuring popup. When I got time I was going to see if I could get into the source pages for this app and try using my text files for xml feed. I bet it would work great. I felt confident I could do it with xml- clueless about doing it from the tags. Also, in my case, all my text files are in a separate single folder where the file name matches the song's file name. Should be doable. Only catch are the ones that have time stamps. Trying to make the lyrics actually feed in sync is probably beyond my skills. Just displaying the whole thing per song is what I was thinking.
Marvelous app by the way. If I wasn't laid off I'd probably donate.
cheers