Thanks for the report.
Regarding USB 1.1 : There is a known incompatibility with VIA USB chipsets. Please let me know which chipset your motherboard is using for the USB1.1 ports.
Also make sure the cmdline.txt is a single line, in previous versions I added a line break and that was messing things up.
You can also try using "Classic Mac" mode in MSDOS, if you'd like since that actually changes the PID/VID and you might have different experience. Feel free as well to unset Classic Mac mode and use different VID/PIDs and report back if you have any success with detection. It's possible the issue is at the USB driver level, and I'm not able to find a via chipset motherboard for a reasonable price.
Regarding the sound issues, I've seen that as well, but it's hit and miss for me. I think I should try restarting the CD Player on each disk load to clear the state, so I'll try and get that looked into.
Have you tried CHD mounting yet?
If you really want to help, and can afford it, you can purchase a USB Sniffer (the open source one) for about $40 USD / 30GBP and capture some of the packets for me, then maybe I can resolve the issue.