I'm having this or a similar issue in 2 separate locations (different Nether portals). Game play is fine in the Overworld and in most of the Nether. When I reach certain locations in the Nether the lag progressively gets worse with each step to the point where I cannot turn around. Like Llewellyn Robinson I too play with touch controls. If I blindly move backwards I the lag gets progressively better until game play returns to normal. If I move forward the lag returns. I cannot confirm whether there is a Blaze spawner nearby but there are Blazes in the area. One of the lag locations is in a Fortress, and with the presence of Blazes I'm guessing the second area has a Fortress nearby. This is very frustrating as I'd like to explore the Nether more, and specifically the fortresses, but the lag has basically taken this aspect of the game away. I too have gone to the lowest graphics settings (render distance 5) and had zero improvement. MCPE 1.1.5
1.1.5 - MCPE on Android. Lost enchanted diamond pick, enchanted diamond sword, and stack of cooked beef. These are the only things I've noticed but I'm sure there have been others. On occasion I have been able to "recover" the item by "save and quitting" and then re-opening the app. Another, possibly related thing I've noticed is that sometimes an inventory item will show in more than one slot. For example, I'd harvest 20 wheat and then go feed the cows. I'd look and see 2 wheat groups in my inventory even though when I harvested there was only one. I cannot confirm but maybe the wheat I'm feeding the cows is overwriting the enchanted item.
Losing your enchanted diamond stuff is extremely annoying to say the least. At the moment I'm afraid to enchant anything.
MCPE - Android - v1.2.1.3
Full diamond armor (never touched) with fire protection III chest. Holding totem of undying saved me. All armor but the chest completely destroyed. Chest barely survived.