Had a post with info, but it looks like you found a way that works for you without using iTunes.
Yes, the iPhone does support MP3 (MPEG 1). The only "proprietary Apple format" it supports is the lossless codec. The other format of music it supports is AAC, an MPEG 4 standard in line with what BluRay discs, HDTV broadcasts, and a few other things use for audio.
Playback is all done via the "Music" app on the phone. Or, if the phone hasn't been updated, it may still have the older "iPod" app on there. Let us know if you have ant questions on playback, but should be pretty easy to figure out once some music is on the device.