Just a quick update.
This whole thing might be a pixel problem, rather than a Poweramp one. Recently used it with Android Auto a lot and I noticed on occasion, Poweramp would not start up with the connection being established. Happened with AAudio, OpenSL and Hi-Res. After the Android Auto connection, navigation and everything works as expected, but when opening the "Now playing" feature, it shows Poweramp using the audio channel. Again, have to force stop it and then launch it again just to work at all.
Decided to try removing Poweramp to test whether the same thing happens with the built-in music app. Not only does the same thing happen, it somehow bricks the Android Auto connection and I have to cold boot the system in the car. "Now Playing" option shows the same error that the channel is being used, but with no app as the culprit.
It is weird to how it happens randomly. I cannot notice a pattern. Will write to the pixel community forums, hopefully Google fixes this.