I've read a lot of movie musical scripts, from CHICAGO to THE PHANTOM OF THE OPERA to SWEENEY TODD to NINE, and it seems to me that most of them never actually highlight the start of the song with a secondary slugline like THE LION KING does.

Most of them just add a note towards the beginning that suggests that sung material will be entirely capitalized, and spoken dialogue won't be. It sets a nice precedent for the rest of the script, particularly since many musicals these days are more "sung-through" (they often use music as dialogue in a pseudo-opera fashion) and thus don't necessarily have clear and defined song breaks.

I come at this from both the theater world and the film world. Pretty much you've said it -- slug, all caps, hard breaks for lyric lines.

Using the slug to show the start of music can be very helpful, especially to avoid confusion between singing and yelling. If a slug is used for start of song, it is often equally as helpful to use one to indicate end of song. (Especially given that dialogue often intertwines -- it is good to give the reader an indication that the song is done.)

One thing to keep in mind: the format plays havoc with page count -- what might be a minute of song may well take several pages of script (as opposed to the one page per minute of screen time idea). Rene Zellweger has the story of scratching her head trying to read the musical script for CHICAGO, hitting page after page of characters just repeating "He reached for, he reached for, he reached for the gun, the gun, the gun" etc.

Cheers all good advice so far and had been very helpful.