It just works, as long as you set the high DMA as the same as the low DMA (otherwise it won't work). It honestly seems the only thing that uses the 16-bit bus is the high DMA and the CD-ROM controller.. While the Creative Labs diagnostic utility crashes doing a sound test (or MIDI) test (as it's not real-mode it seems), you can test this easily on an 8-bit slot in a 286 class machine and run the diagnostic utility, it DOES play the 16-bit sound sample, and clearly too..
Nice, I was under the impression that only relatively few 16-bit cards would work in 8-bit slots (only devices MEANT to be backward compatible, IE dual 8/16bit mode cards would work). I have tried this with a few (even with the supposedly compatible 3c509 card) and never had any luck getting them to work.
As far as your Text issues, I wonder if the upper ascii is different for MCGA than it is for VGA (which I assume the SB software may be detecting it as.). I might have to go toss a SB16 into my PS2/25 and see what happens on mine. You could also have some other issue too.
EDIT: Oops I probably cant run the SB software on mine, I still have the stock 8086, I am pretty sure the software will bomb without a V30. Maybe I can print all the upper ascii on screen and see what it shows, see if it shows proper ascii line characters or something else.