Thanks! It appears that the 978-981 build does not have the issue I described: after installing the 978-981 version I can play the file from Downloads and I do see the lyrics!
Guess my issue was fixed somewhere between 976 and 978-981.
I did a factory reset and first installed the 976 version from Google Play Market, the lyrics were still not showing on the file in Downloads, but after I installed the 978-981 from the link you provided the lyrics started to show.
Hope 978-981 makes it from beta to stable soon and nobody will ever have to face this issue.
Thank you very much.
klesun's post in id3v2 embeded lyrics don't get picked up when playing an mp3 file from File Manager instead of Library, Rescan Lyrics Tags has no effect was marked as the answer