I may be wrong, but what I think will happen in your case is this: Once you initialize and resync your files...from then on you should be able to make changes to lyrics and cover art in files, delete them from the iPod and then sync them back to the iPod. Those files should then work on the iPod with cover art and lyrics. I know it will with cover art, I have yet to try it with the lyrics.
I suggest that you first initialize the iPod and clear out whatever problem you are currently having. Then sync just a few songs...maybe an album or two including some files with and without art and lyrics. Then go ahead and add some lyrics or art to some of those files in MC. Try deleting those files off of the iPod and the syncing them back on and see if it works. If it does, you should be set. Then simply reload your entire library back onto the iPod.
As for photos and video, it is still a mixed bag. For the most part it is pretty sweet. Using MC for photos on the iPod is so much better than iTunes. iTunes will simply sync whatever photos you have in a specific folder, and arange them by whatever subfolders they are located in. With MC, you can edit and sort and manage all of your photos and easily sync them to the iPod. However, due to limitations of the iPod photo database, you cannot sort them on the iPod via playlists, or with most of the commonly used tags likes people, places, or events. Instead, MC will sort your photos on the iPod with the album tag. That is not too bad though. Also, MC will upload the MC logo as the cover art for files that have none. All of your files will have an image...either the cover art, or the MC logo.
Video support also needs some work. Right now MC will upload most iPod formatted videos to the iPod, but it does not yet sort them into the correct iPod menus (like TV Shows, Movies, Video Podcasts, etc.) iTunes would sort all of your tv shows in order by show name, and season, all under the TV Shows menu. Instead, MC will clump all of your videos together indiscriminately in the Movies menu.
Another problem is MC does not like m4v files which you download from iTunes. It may just be a problem I am having, though. Once an m4v file is in MC, it will upload it to the iPod. The trouble I am having is that I cannot get MC to import it. It does not work if I select the import media option and MC scans the drive, and it does not work if I drag and drop the file into MC. I have to work around it by importing another file, and then manually changing the file name and path in MC to reflect the filename and path of the m4v file i want. Then, MC has control of it and will allow me to manage it and eventually upload to the iPod.
To sort my videos, I have created a playlist group called videos. The group is filled with smartlists...such as movies, music videos, trailers, video clips, and a different smartlist for each television show I collect episodes of. The iPod will then display each of these playlists as individual menus on the iPod.
I am very happy with the new iPod features MC 11.1 has to offer, and I look forward to further improvement and enhancements.