EAC's claim to fame is it's ability to get information off of compromised CDs. Other than wavs, it is agnostic as far as formats are concerned. If I remember correctly (always a question at my age), I had to download and install lame before it would create mp3s. I know I had to install flac before it would create those. I can't comment on sound quality as I don't currently have a way to listen to ripped music directly on my main system and the desktop system doesn't have the resolution necessary for comparisons. I do think there's a Logitech Touch in my future though.
You can think of flac levels in the same way that there are different levels of compression available with zip programs. Even though you get varying amounts of compression depending on the zip compression method chosen, the resulting unzipped file is identical to the original - if it weren't zip compression would be useless. Higher levels in flac just mean that the program is more diligent in looking for bit sequences that can be compressed. The extra diligence means that it takes longer.
I have experimented with the single file flac encoding where a cue sheet is encoded in the file. Foobar 2000 seems to understand this format but I'm not sure about other programs. There also doesn't seem to be a way to embed album art in the compressed file. IMO what is really needed is a STANDARD format for encoding albums in one file including the album art, lyrics, comments, etc. This may be what the container formats I've heard about are for but I don't know enough about them yet and, obviously, none have caught on that well. And gapless playback is a biggie. There are few things more irritating than listening to Pink Floyd and having 2 second gaps stuck in the middle of songs meant to blend seamlessly.