For your first question, I wrote up a short test designed to make relative comparisons of headphones/IEMs as simple as possible, based on my own testing process derived from my listening experiences with a variety of gear. The BTR5 should be transparent with the ZS10, meaning it shouldn't audibly alter how the music sounds, and the difference between Amazon Music's V0 variable-bitrate MP3 and lossless FLAC isn't something I'd worry about unless you're an extreme stickler who can't live without flawless cymbal timbre at all times.

For your second, I'd say diminishing returns start hitting very hard at $250 for IEMs (Moondrop B2: Dusk) and $500 for headphones (Hifiman Edition XS, used Focal Elex, etc.). That said, chi-fi is still spiraling down in a pricing race to the bottom, which will probably keep on raising the quality-to-price ratio in the future.