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I was wondering if LAME is really stuck at 320 kbps. Is it possible for someone to implement a new VBR system that would have samples in the range of 32k to 500kbps?
The bitrate for an mp3 frame is determined by an index value in the header, limiting MP3 frames to the well-known pre-defined bitrates. It would be impossible to have an arbitrary bitrate (e.g. 500kbps). The bit reservoir (frame start offset) allows for data to span multiple frames, which gives MP3 encoders more precise bitrate control with VBR.
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Bourne, I really don't think people are out to get you. If Gabriel and others are telling you that freeformat is for CBR, you'd be wise to believe them.
It would go away beyond "nonstandard" and probably a mostly academic exercise, but free-format MP3 frames combined with a container file format like MP4 could effectively be VBR. This is because the container format would store the frame size values.
The reason that free-format MP3 must be CBR is that it the frame sizes must either be given to the decoder out-of-band (in which case it's much easier to have a constant value), or the decoder must guess (and the guessing would only work if the frame sizes were consistent).
MP3 frame sizes are calculated based on a formula involving the mpeg version, layer, bitrate, sample rate, crc flag and padding flag. Free-format is signalled by a bitrate index value of "0" and so the exact bitrate is unknown. Since the exact bitrate is unknown, the frame size is also unknown.