Can you stream lossless Apple Music to the latest generation AirPort Express 2 (A1392)?

As you are already aware Apple is now providing their entire Apple Music catalog encoded using ALAC in resolutions ranging from 16-bit/44.1 kHz (CD Quality) up to 24-bit/192 kHz (DVD/Blu-Ray Quality). In turn, the AirPort Express, is limited to the "CD Quality" end for AirPlay 1 or 2. So, yes, your base station should be able to play these streams.

What is noteworthy is how the (analog/digital) audio source is treated differently. For example of each: If you stream an AIFF file, it will first be compressed to ALAC, and then, decompressed to PCM with the same quality as the original AIFF file. On the other hand if you stream an AAC file, it will be compressed to ALAC, and then, decompressed to PCM ... but at the same quality of the original AAC file.

Of course, when using an external DAC, you will bypass the base station's internal one, and that external DAC, will have influence on the final audio signal going to your pre-amp/speakers.

No, since AirPlay always downsamples things to 24 bit, 44.1 kHz, which some folks claim to be about the same as "regular" CD quality. Opinions vary on things like this though.

Not many folks would call 16/44.1 lossless, since it has already been compressed. Opinions vary though and audiophiles argue constantly about things like this.. Give the Express a try. If you like the results, great.