CloudMuzik developer here. To answer the question about increasing the bitrate of the cached song, it isn't possible. What I basically do for the caching is download the streamed version of the song. The bitrate of the downloaded song will be the bitrate of the same song that was uploaded through Google Music.
I do want to thank everyone for using the app and for those who have attempted to use it before v 220.127.116.11, sorry for the pains. I am currently working on 18.104.22.168 at the moment and I hope to bring a lot more functionality to the plate. Some bugs still exist in the current version that I am doing my best to get rid of and hopefully I can make the app more solid. I have a thread over at xda-developers that I'll be updating as I make progress.
[APP] CloudMuzik - Google Music Player for WP8 - xda-developers <--. I'll be looking at this post also, so feel free to post any feature suggestions and things you'd like to see improved.