Yeah 1.8V is no trouble at all. See here for an example hardware design using 1.8V IO and the flash you mentioned.
https://www.xmos.com/xk-voice-l71
Agree the docs aren't clear on the dummy cycles. They are referring to the number of dummy cycles used with the 0xEB quad fast read command rather than any dummy cycles associated with the SFDP command. Will get the docs updated.
To run any form of USB you always need a 3.3V supply from somewhere as this is used for the basic signalling level in full speed mode. This is used to then negotiate to high speed (if used) which uses the 1.8V supply for signalling current. The device has separate pins for each of these supplies. The current they use is specified in the datasheet. Obviously if you're not using USB you don't need those supplies and could run the whole device on 1.8V (and 0.9V).
If you're moving to 1.8V for lower power, note the latest sw_usb_audio has new features to enable lower power systems.
https://www.xmos.com/file/sw_usb_audio- ... sign-guide
Cheers,
Joe
XMOS hardware grey beard.