It would probably benefit from larger buffers, not smaller ones.
Possibly, but larger buffers take more time to fill. Try it both ways and you might be surprised.
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When you render them to audio, I think it is inserting fades in the audio tracks at the transitions, and that smooths things out. I just have to get used to it.
Now that's an interesting speculation. I don't think we know anything about that. You might be right. I tend to think that BIAB can process at whatever pace it wants to produce the high quality rendering, because you aren't listening at the same time. The 'smoothing' is just a guess.