Very true. We tried to accomodate for audiobooks and podcasts by adding 30 second back button and a larger slider that's easier to scrub. It isn't perfect, but is much better than the Music app.
You're right though, an app especially for audiobooks with bookmarks, notes, etc. would be great.
Good question, Joe. Not all apps that replace native iOS apps are the same nor use the same techniques.
Since our app uses the built-in iPod Music controller, we activate all the same features that the Music app does. So, your example of showing the album art on the lock screen does in fact work.
This is different than different category apps, like Safari replacements, that can't take advantage of all the built-in controls/features outside of the app.