Pausing is caused by the Qt Multimedia back end and there is no way to stop it from doing this, AFAIK. My Phonon back end does not do this but has other issues, namely power consumption.

After some weeks of on and off development time, my current stand on the equalizer issue is, either we do it right or we don't do it at all.
I had to interrupt development temporarily but next week is the start of my three weeks of vacation, so who knows what will happen in this time (first week for Mass Effect 3, that is for sure
Either way, version 1.0 for N9 will surface before March, 15th and it will not contain the equalizer. @DarkSkies, as lalomartins described, it is not a cosmetic issue at the moment. Your suggestion is nice. I will add that to the TODO list. Bass and treble can actually be optimized better than a generic equalizer by using a specialized IIR filter. We will see how that works out, especially in the power consumption department. As lalomartins mentioned, most of the work is spend in other parts of the processing pipeline. Other music players mostly use the GStreamer plugins "equalizer-10bands" et al. which do not seem to be very optimized for mobile demands + the GStreamer abstraction also adds its toll here (unnecessary buffer copying etc.).

As for the N900 support, the Qt Quick support in N900's Qt 4.7.0 is really buggy, to the extent that I can't even pass QObject pointers from QML to Q_INVOKABLE C++ methods without corrupting the stack (Qt developers can follow me here). This all works perfectly in 4.7.1 and up. I really need to find a workaround or this port is dead in the water.
Does the Community SSU finally contain a Qt version higher than 4.7.0 that is stable?