How much does it matter though when you're going to boil it (or get it close enough) anyway?
To me, it doesn't matter at all. I don't bother sanitizing anything involved with the mash. I typically just rinse my cooler out and wipe it down and put the lid on and store it for the next usage. Because I have a dog I do check for black hairs and rinse everything again before use, especially if they have been sitting around uncovered. As you said, it doesn't matter because it's going to be boiled for an hour at least. Anything that can live in the mash at temps around 150F for an hour or more and then be comfortable in boiling hot wort for another hour sure isn't going to be killed by any starsan.. that's my thinking at least.
As for top up water, this comes dangerously close to a discussion of whether rinsing your equipment after sanitizing is fine or if it introduces unwanted nasties... (how about we talk about hydrometers or aluminum brew pots while we're at it?) When I was doing extract batches I always boiled the top up water.. the one time I didn't was for my gf's wine kit (she was in a rush) and guess what.. infection. Frankly, I think you can have some fairly poor sanitation and still make good beer quite often - but when you do get an infection you'll kick yourself for not being more careful. I'm not saying that using unboiled tap water or bottled water is terrible, but it certainly is not as sanitary as using boiled water.
My PH leaving the treament plant is 7.1. Is this pretty bad or what? If so, what would this do to my flavors when mashing and so forth?
What it will affect is you mash efficiency - while I'm too lazy to get palmer's book out I do recall that different enzymes are favored by different PHs.. 5.2 or 5.3 is the ideal compromise. Now, your malts will have an acidifying effect on the water and different malts will have more or less of that acidifying effect. Basically, your darker malts will have a greater acidifying effect than your lighter malts. What's really important here is water hardness - 7 is typical PH for tap water but some regions have very hard (mineral rich) water and others don't (or have a water "softener" or reverse osmosis water filter). If you have hard water then it will not be affected as much by the malts. If, however, you have soft water then even light malts will have a significant effect on your mash PH. Palmer, in How to Brew, lays out a technique for predicting mash PH based on your water's hardness and the effect of the malts - it's complicated and, frankly, I don't fully understand it. The easy method is to buy some strips, or better still a PH meter, and do the mash as usual and check the PH to see where it ended up. If it's low then add some baking soda (a little goes a long way). If it's high then some gypsum from your LHBS will lower it. Gypsum and baking soda are A LOT cheaper than the 5.2 stuff and not that hard to use. I'd suggest you give it a try in your next batch.
I'd still like to understand why I was told to use lactic acid to acidify the mash water though (instead of the gypsum)... I'm also hoping that it won't impart a souring taste to the brew. Anyone have any ideas?