There's a thread deep in bug reports somewhere, from a long time ago, where we were able to reproduce strange distortion by feeding the EQ some extreme values in fixed-q mode. As far as we know, it's some kind of a bug, either in the DSP itself or in the values sent to the DSP.
This is assuming you're running Beta 13. If you're running beta 11, there were even more serious bugs in the fixed-q mode of the equalizer.
Reason it's not in the FAQ: I try to avoid posting bugs in the FAQ, that's what searches in the bug reports forum are for. I make a few exceptions to that rule when it's a really widespread bug, but no one else reported this one because they didn't input extreme values into the EQ.
However, I never made it screech, and I could fix the distortion just by backing off on the extreme EQ values. Your screeching thing sounds more likely to be a problem with the amplifier going bad (though I can't say for sure). It's possible that it's not related to the EQ at all, or maybe only indirectly related. For instance, if you were adjusting the bass to be louder, maybe the amp tried to drive too much wattage into the speakers and fried a channel.