1. Yes it receives up to 7.1 pcm. If you're not using T71 IEM it will perform downmix through its 8 channels dac.
2. Yes, it works on Linux. At the moment I'm using it with moodeaudio on pie zero w 2.
3. Not sure what you mean. But at the moment you can adjust volume of each channel independently.
I just noticed there's an option called "Second harmonic regulation" on the R7 setting. Perhaps it was turned on by accident while testing? Or maybe it was turned on by default?