Ethiopian plans to install lie flats in all 787s by the end of 2017-- perhaps it was fiscal 2017 (July), I'm not quite sure.
As for the lounge situation, it's much improved from years past, and while it certainly compare with what TK offers in IST, it's serviceable. Furthermore, I've seen plans for the present airport expansion and they include a substantially expanded lounge. But that's a few years away. All the same, I'd still strongly recommend ET.