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Hrmm, it's weird that you don't get crash reports. 

Textastic 4.0.2 is now available on the App Store. I've fixed a few minor issues. Please try it out - maybe if fixes the problem.
Also, it would be nice if you could send me the crash reports. See http://feedback.textasticapp.com/topic/48133-how-do-i-send-crash-reports/
What kind of file are you editing when this happens? 
Implemented in Textastic 4.0.2:

You can press return to accept the top-most entry.
Use the arrow keys on the external keyboard to select a different entry from the list. Hit return to accept the selected entry.
Use the left or right arrow keys to close the list.

For the on-screen keyboard nothing has changed.
Yes, Textastic has syntax highlighting for Java and a huge amount of other languages. Here's a list: http://www.textasticapp.com/v4/manual/lessons/Which_file_types_are_supported.html
Thanks. Similar buttons were already used in the apps "Heart Writer" and "FlickKey", so I can't really take credit for the original idea. But I've put a lot of thought in the arrangement of the keys in Textastic.