I've reached out to a couple of developers to see if they can update their app since they do seem to tick a few of your boxes and many other runners with an Apple Watch. Maybe you could do the same the see if they can upgrade their apps to support the requested features and work with the latest WatchOS.
The best of the bunch as far as feature requests, however not up to date and reviews are bad due to this:
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Stop&Go Music Player (limited free and paid version available, offline, crossfade, not updated since 2019, no equalizer?, cloud sync problems according to App Store reviews) - have you tried the
free version of this one?
Others:
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MixTape Audio Sync (offline cloud music on Watch, no equalizer or crossfade, last update 2018)
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Videwatch (offline iCloud music on Watch, no equalizer, crossfade and it seems no option for multiple playlists, had update in March '22)
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Watch Media Player (offline music on Watch via iCloud or otherwise local phone storage, no equalizer or crossfade, last update June '22)
There are also two apps (USB Disk SE - File Manager, File Manager - Exchange files) which could be an option as well if they added a crossfade and equalizer but slight chance they will since their focused on File Manager.
See also
my updated list of Apple Watch supported music apps. Some offer offline Apple Watch support and the amount that offer equalizer and crossfade are even more limited as you have noticed.
It's sad that there are so many Apple Watch supported music apps in the store which haven't been updated in ages let alone offer offline, crossfade and equalizer functionality on the watch.