OK - so I have now had some fun playing with FLAC encoding using the new (version 1.1.3b), the old (version 1.1.2a) and Phatnoise Media Manager 3.92 (FLAC version 1.1.2, but encode settings unknown).
I ripped 6 CDs to WAV with iTunes, then used the different FLAC encoders to generate sets of FLAC files. For PMM, I allowed it to do the ripping. The versions of FLAC downloadable from the sourceforge site include a Windows front-end. I left that at the default settings, except for the removal of the replay gain function.
Encoding - Both versions 1.1.2a and 1.1.3b offer usefully better compression to FLAC than the PMM software (files can easily be 10% to 15% smaller = 10% to 15% more CD's on a hard disk). 1.1.3b is marginally better than 1.1.2a (by about 1%) at the same setting (default under Windows is level 6). However, the new 1.1.3b version is also 25% slower when encoding at that setting. If ripping and converting at the same time, this difference would generally be less noticable since the ripping from CD often limits the speed. Knocking version 1.1.3b back to level 3 or 4 seems to offer roughly equivalent file size and conversion speed to 1.1.2a at level 6.
Decoding - All versions, are compatible at the binary level (as they should be for a lossless codec). I tested with about 12 CD's worth of files (8 Gigs of WAV) encoded and decoded with different versions (twice, with old codec to new codec, and new codec to old codec). I then did a binary compare on the WAV files reconstituted in each case and they were completely identical. Files from the new 1.1.3b version also play correctly in the Phatbox (and on my Roku SoundBridge). Phatnoise Media Manager also handles tags correctly from the new files (tagging was not changed anyway) so the voice announcements generated by PMM are also correct.
Summary - The FLAC encoder in Phatnoise Media Manager is embedded in a DLL along with other encoders and so cannot be separated. However, it is possible to rip CDs and convert to FLAC using the new encoder outside of PMM, and this does bring a space saving advantage of 10% to 15% on the DMS, at the expense of less integration in the ripping, tagging and DMS syncing process.
I hope that folks find this useful.
