Your comments

It appears there's no more hiccup on MyTouch 4 as it happened on previous version with streaming engine enabled. I will run Optimus Virgin and see is it OK.
It also has an issue with Galaxy Tab as the screen is 1024x600, to there are 4 black bars around the application.
Hopefully the next release will support more screen resolution (960x540, 1024x600)
Everybody, here is a great news!
I just found the latest 2.2.1 on market and now it can play streaming aac+ without internal streaming engine enabled!!!
I tested it on Galaxy Tab and G2x and both work 100% with aac+ streams (wfuv 64k aac stream) without internal streaming engine.

If you read my result, you may understand why it's off by default.
Some phones/tablets with good 3D rendering in quadrant seem to be running well. However, it's choppy with aac+ on some low end machines even MyTouch 4.
Nexus one and NS are not tested because they're upgraded to 2.3.4 so custom streaming engine is not required, so does X10i which runs on 2.1 that the platform doesn't have aac+ streaming problem.
Other streaming formats don't need customer streaming engine (you don't have to enable it if you don't have aac+ stream, or your platform is either 2.1 or 2.3.4 or higher).

New 2.1.9 has internal streaming engine and it can play streaming aac+ on "few" machines:
Tested on the device I have:
nexus one, NS, X10 are not included.
G2x: OK
Galaxy Tab: OK
MyTouch 4: choppy
Optimus Virgin: choppy

It appears if the device has decent 3D performance, it doesn't have problem. I guess this engine requires good FPU (floating point unit) which affects 3D performance.
Good news:
2.1.9 is available on the market.
It appears "media control stealing" is fixed with Winamp. Now I don't have to worry to run a station by accident.
Now I am testing the independent streaming engine with aac+ stations (WFUV, LiveIreland, Northern Woods Radio) and it looks working. (I don't have to worry on X10 as it runs on 2.1 and NS runs on 2.3.4)
I have exactly same problem using iphone headset with X10, G2x, Galaxy Tab, and Nexus S.
The playback control issue is annoying because the application starts to play when I press the headset button. This can be a major issue for using too much data because of that.
There's an option to disable the headset control but it doesn't work. However, there's a temporary workaround: get headset button controller from market and re-configure which player is controlled by the headset.
It's OS issue and streamingfurious doesn't play aac+ streams on 2.2 and 2.3 platforms.
However, tunein radio and antplayer work fine (both uses independent streaming engine), so if xiialive can use independent streaming engine it will work.
This is different from the widget.
On the main screen, go to settings and scroll down to see "lifetime streaming stats".
I don't need this stats as my mobile internet is virtually unlimited and I don't worry about it, so I suggest there's an option to show (default) or hide this status as well as letting the user to reset the meter.
Usage meter isn't necessary for me; however, I know it may be useful for some other users.
Here is my idea: add an option to user to enable (default) or disable usage meter.