On the noneditable user dictionary issue, the workaround we've settled on for 2.0 at least is adding an "Unlock" button to the edit entry screen, which makes those fields editable again after popping up a warning message that this will invalidate any flashcards linking to that dictionary entry. What it's actually doing behind the scenes is deleting the old entry and creating a brand new one (new entry ID) with the updated text when you tap the Done button, but this seemed a lot more elegant than that duplicate-entry idea. An alternative some people might find useful would be to create a new entry as a flashcard (which makes it freely editable), tweak away until you're happy with it and then tap on the "To User" button to make it into a user dictionary entry.
I admit none of this is ideal, and hopefully in another release or two it'll be fixed, but for right now even if we could work around the technical issues we really don't want to have a situation where the headword for a particular dictionary entry ID might change; it would screw up flashcards in 2.0 (since now you'd have a flashcard with a headword that disagreed with the dictionary entry it linked to) and could screw up all sorts of other things down the line (annotations, for example). Searching for / updating flashcards that linked to the entry would be very slow and wouldn't do anything for flashcards in XML export files. We probably need to add some sort of revision-tracking system so that those other items that link to the entry could update (or invalidate) themselves when they found that the entry had changed, but designing something like that would take quite a while and would need to factor in the also-not-yet-designed desktop / online sync protocols, so for the short-term a slightly-awkward editing procedure seems like a reasonable compromise.
sfrrr - not sure what's going on with that blinking cursor, it's only supposed to appear if the field has the keyboard focus - that whole area is kind of buggy at the moment, though, the main dictionary input field often doesn't get a cursor at all.
ldolse - the real way to fix that workflow would be for us to add a better built-in text editor, something that lets you pull up / insert words from dictionary entries, enter characters using Pinyin as with an IME, etc. Which is certainly something we'd like to do in a future release. In the meantime, though, the Edit Card screen would actually streamline this a bit, albeit in a way it was never designed to do; if you flip between the From Dict and Custom tabs in that, the text in the Custom section won't be updated when you look up a new dictionary entry (only when you actually save out the edited card), so you can look something up in the From Dict half, copy some text out of that, and paste it into the Custom half without ever leaving that screen. (and then use the To User button as I mentioned above) Just make sure that you're in Custom when you exit the screen.
ipsi - the user dictionary is indeed in SQLite, but given the ID consistency / flashcard-linking issues I mentioned above I wouldn't necessarily recommend doing anything in it that our own software doesn't do, since we can't promise that won't cause weird behavior in a future release. But we're still planning to release that "Desktop Preview" version I mentioned at some point in the not too distant future, and even though that won't have any sort of synchronization system built-in, it will use the same database format as the other versions, so you could move your databases over to your desktop, edit them on there with the benefit of a better IME and other desktop/online dictionaries (or, better yet, two simultaneously-running copies of Pleco) and hence be fully satisfied with the entry before saving it.