Thank you! I wrote your points down. We're still learning how to make it most usable.

We know the start and end timestamps on a word level and we know the current player time. So all we do is set a CSS class on the words that are currently playing. We not only highlight the current word, but also the words that are close in time. This is what generates the effect.

We just released autoscroll, which is something that was requested often.