The simple or not so simple VoiceOver setting preventing FlickType from functioning properly was direct touch, which I had turned off for some unknown reason. Flicktype needs direct touch to be on. Even when I reset all settings on my phone, I still experienced the problems described previously until I stumbled upon direct touch an hour ago. I had encountered direct touch in my rotor last night possibly while using FlickType, but I do not remember for certain. I must have not toggled it back on again. I really knew that I had a problem when even the FlickType app in the app store failed to respond on my phone. The fact that direct touch needs to be on for FlickType to work correctly with VoiceOver makes sense.
I am typing this email using the latest version of the FlickType custom keyboard, which is performing as expected. I appreciate that there is no latency after the keyboard has had time to load. Today, I am often retyping words, which probably has nothing to do with the predictive engine.
Thanks for all of your hard work Kosta, and for being patient with me and my false alarms. I hope that I have not set your work back in any way.