Yes, I have 10 Raspberry Pies throughout my home. Most all of them use USB output to a Dac or an Amp with an internal Dac. You’ve already got and understand the Squeezelite software. So, I think you just need a few tweaks. If your Rpi is a Model 4 or 5 the USB will give you SQ, that is as good as it gets. if your Rpi is a Model 3 or below, USB is not going to work as well.
Get rid of the 7 inch Screen and just use the Rpi.... And as I mentioned, if you have a TV nearby you can display artwork on the TV in a variety of ways. What I do is use Screen Ctrl on my phone and cast it to the TV. I use a Chromecast in the back of the TV.... I get an amazing artwork Picture on my 55 inch OLED TV - With bit rate and Track progress displayed.
I’m not sure where you are going to ’Set up’ your streamer, but an RPi is so flexible and cheap that there are many options for you.