Does it matter where the flippers are when you paddle? Less drag when horizontal or better directional stability vertical?
Congratulations on your new boat! Drag difference is negligible. Fins down for best directional stability, fins up for shallow water, surf or if you want more paddle steering input. Remember, this boat can be edged for minor directional adjustment, pedaling or paddling. Double check rudder directional control lines to be snug (with rudder down and centered) for best directional stability. Slack is removed at the rudder connection. You can get even more directional stability/rudder authority by using large rudder.
Is there a recommended lubricant for the hatch O rings?
An acceptable alternate to spray silicone is silicone grease -- lasts longer but collects sand and dirt.
I've seen a post where heat shrink tubing was put over the swedged ends of the cable, will that help salt water longevity?
Don't think so -- might trap moisture. Thorough rinse is best after each use IMO
Should I adjust the pedals so I can fully extend my knee or should I be able to feel the bump at the end of the pedal travel? Right now I'm set for full extension, with pedals on balls of my feet. Is that the way to get the most power?
Yes, fully extended so you don't hit the stops with normal use.