From an audience point of view, I think the music must take precedence over lyrics - and I speak as one who started off as a writer rather than a musician, so if anything, my bias should be the other way around. Unless the listener is arrested by the melody, he is not going to pay much attention to the lyrics. Also, the music can often convey much more than words anyway. The most wonderful lyrics may not always lend themselves to an arresting melody line. However, both music and lyrics must be a convincing representation of the situation.
Lyrics are a funny thing.
There will always be critics. Some will criticise you for too much rhyming while other will criticise for not enough rhyming. It has also become increasingly apparent to me that lyrics which may be thought great in a pop song do not often work in a theatrical context where the lyrics have to be rooted in the narrative. I think this applies to the music as well. Melodies which work well in the pop idiom do not usually work well on stage.