I'm running 1.1.
I had a minor brainwave when listening to this week's Bilge Tank. You mentioned that it was a good idea to up the current limit on the Pi when using Flotilla. It doesn't look like the Flotilla install script does this automatically so I added max_usb_current=1 to my /boot/config.txt manually and tried the motors/joystick combination again.
A dramatic improvement! The lag and hanging we encountered previously has all but disappeared.
Also, the Rainbow now works with the slider (albeit with a second or so delay between a change in position generating a corresponding change in brightness).
I still noticed that with more than 5-6 rows in the Rockpool, response time to any change in input seemed to increase. I also managed to hang everything by swapping a few components in and out. A simple restart of flotilla server fixed things.