View Song Lyrics in iTunes

Have you tried Lyritop? It's an app that displays the current iTunes song lyrics on the desktop. It does display a dock icon. You can also adjust font, size, position, color, shadow, etc.

There are no individual lyric files that are stored on your computer. The lyric information is embedded in the id3 tag of each song file. There is an app called MP3LyricsExtractor that will batch extract song lyrics into individual text files.

You can't do this with a smart playlist as Apple doesn't expose the lyric field there.

You can create an Applescript that creates a playlist. You'd then have to rerun the script to update the playlist. A track has a playlist field so you'd just check that.

Here's one example of such a script

tell application "iTunes"

    if exists playlist "No Lyrics" then
        delete playlist "No Lyrics"
    end if

    make new playlist with properties {name:"No Lyrics"}

   duplicate (every track of playlist 1 whose lyrics is equal to "") to playlist "No Lyrics"

end tell