As far as I can tell, it has no problems with .m4a's that aren't resulting from the programmed in blocks. Tags show up just fine in the playlist manager, and Audiosurf is fine too.
However, I have been having one gigantic bug that I originally thought had something to do with whatever made it not connect: when trying to play a playlist, it will play a song, and then it will play that song again, and never go to another song. I tried pressing next in the middle of the song, and it just restarted the song. A check of the log confirmed it was sending the exact same song every time.
EDIT: This is completely unrelated to .m4a's, as a playlist consisting of only .mp3's will consistently play the same exact song. I have shuffle on, haven't checked with it off, but it's almost worthless to me off because then it's the same list of songs every time.
ALSO: The problem with it refusing to connect seems to be related to closing Audiosurf not through YAAP, i.e. the red X. Not checked with the actual exit command, closing using YAAP is fine(possible because it thinks it's still open and opening it again does nothing?). Once this begins, nothing short of deleting YAAP and the related dll's and replacing them with a new version will fix it.
Added on a DxDiag just in case it would be helpful, quick and easy statement is I'm running Vista.
ANOTHER EDIT: What does YAAP wait for to tell it that Audiosurf has received the song?
HI: I just tested seeing if it needs to get back to the character screen, and that made it not accept the next song hotkey at all. With Audiosurf online, it now recieves commands from Audiosurf as well, but it still insists on playing the exact same song every single time. The logs are something like "playing artist Frank Klepacki" "playing song Act On Instinct" "loaded ash file (ash location)", so I would then assume that means YAAP can't do playlists for an offline Audiosurf. There were no logs about scores, even though it did get to the scoreboard.
DKJF: I should probably add that, in the middle of this somewhere(think it was during the online testing phase), I tried telling it to go to the next song without ending the current song, and got a .NET error. YAAP crashed, Audiosurf did nothing. Not that important, just wanted to let you know.