You should find this interesting. This is from Peter Landschoot, associate professor of turfgrass science at Penn State's College of Agricultural Sciences.

A lot of companies market something called Penn State Mix. Penn State University has absolutely nothing to do with these companies, the makeup of the mix or the seed. These mixes can contain just about anything -- sometimes you'll find it's a good mix, but sometimes it's very poor quality.

Scott's does not have the label for your grass seed online (404 error), so it's hard to know what you might have.

1. Why do I have such an ugly color lawn? Is it the seed I used?

Could be but it's more likely the fertilizer you forgot to use. You didn't mention that you used any so I'm making an assumption. If you did fertilize, what did you use and when?

2. What is the grass that almost feels and looks like hay?

Need the label off the Scott's bag to know the Guaranteed Analysis of the seed. That is not completely likely to help because what you probably have is a weed that's giving you that effect. Does that grass ever go to seed? If so, can you let it go to seed and take a picture. Grass is much easier to ID if there's a seed head or flower.

3. What, if anything can I do to fix this and make it a nice, green lawn (other than starting over which is last resort)?

Fertilize if you have not already done so. This time of year you should not use chemical fertilizers, but you may use all the organic fertilizer your budget allows. Rather than using commercially bagged organic fertilizer, I prefer to use the ingredients of those same fertilizers. You can buy them at any feed store under the name of alfalfa, corn, wheat, soybean meal, etc. It's a little secret that organic fertilizer is made from animal feed. The application rate for any of them is 20 pounds per 1,000 square feet. Again, you can use it any day of the year, or every day of the year, with no fear of hurting the grass. It takes 3 full weeks before you see results with these grain type fertilizers.

If you have been fertilizing, then there is likely a problem with your soil. Send a sample to Logan Labs in Ohio for testing. You are undoubtedly strongly inclined to send your sample to Penn State, but you'll get a lot more test for the money at Logan Labs.

*Note - I have small mounds, maybe golfball size that appear and when I knock them over, there are holes about the diameter of a pen or sharpie. I have no idea what is creating these. There are no holes protruding from the "ball" except the one that enters down into the soil.

These are likely earth worm mounds. Sometimes they indicate that you have a hard layer of soil under the softer layer of soil. This can happen when you rototill. A much better way to soften your soil is to use any clear shampoo, like baby shampoo, to increase water penetration and soften the soil deeper down.

How have you been watering (when you water)? How often and how long when you do water?
How high/low are you mowing the grass?

"Scott's does not have the label for your grass seed online (404 error), so it's hard to know what you might have."

I got a copy of the label and this is what was in the mix that I used:
9.76% Wendy Jean Creeping Red Fescue
9.75% Shademaster III Creeping Red Fescue
8.77% Citation Fore Perennial Ryegrass
8.28% Silver Dollar Perennial Ryegrass
6.34% Gaelic Kentucky Bluegrass
2.92% Abbey Kentucky Bluegrass
2.92% Right Kentucky Bluegrass

50.00% Water Smart Plus Fertilizer Coating
1.00% Inert From Seed
.25% Other Crop Seed
.01% Weed Seed
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"1. Why do I have such an ugly color lawn? Is it the seed I used?
Could be but it's more likely the fertilizer you forgot to use. You didn't mention that you used any so I'm making an assumption. If you did fertilize, what did you use and when?"

You are correct, I did not use any. I listened to the guy at Home Depot (maybe a mistake?) that told me I should not fertilize a new lawn, it could kill the grass coming in.
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"2. What is the grass that almost feels and looks like hay?
Need the label off the Scott's bag to know the Guaranteed Analysis of the seed. That is not completely likely to help because what you probably have is a weed that's giving you that effect. Does that grass ever go to seed? If so, can you let it go to seed and take a picture. Grass is much easier to ID if there's a seed head or flower."

I’m not sure to be honest. When I pull a piece out, it comes from the same stem that has 3 or 4 other grass-like blades (that are still green).
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"3. What, if anything can I do to fix this and make it a nice, green lawn (other than starting over which is last resort)?
Fertilize if you have not already done so. This time of year you should not use chemical fertilizers, but you may use all the organic fertilizer your budget allows. Rather than using commercially bagged organic fertilizer, I prefer to use the ingredients of those same fertilizers. You can buy them at any feed store under the name of alfalfa, corn, wheat, soybean meal, etc. It's a little secret that organic fertilizer is made from animal feed. The application rate for any of them is 20 pounds per 1,000 square feet. Again, you can use it any day of the year, or every day of the year, with no fear of hurting the grass. It takes 3 full weeks before you see results with these grain type fertilizers."

I can definitely try that. With that, I’m sure I wouldn’t have to worry about my puppy ingesting any of it.
If you have been fertilizing, then there is likely a problem with your soil. Send a sample to Logan Labs in Ohio for testing. You are undoubtedly strongly inclined to send your sample to Penn State, but you'll get a lot more test for the money at Logan Labs.
To be honest, I wouldn’t have any idea where to send it, but now I have an idea.
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"*Note - I have small mounds, maybe golfball size that appear and when I knock them over, there are holes about the diameter of a pen or sharpie. I have no idea what is creating these. There are no holes protruding from the "ball" except the one that enters down into the soil.
These are likely earth worm mounds. Sometimes they indicate that you have a hard layer of soil under the softer layer of soil. This can happen when you rototill. A much better way to soften your soil is to use any clear shampoo, like baby shampoo, to increase water penetration and soften the soil deeper down."

I tilled last year because the yard was probably 4-6 inches too high. When It would rain, the patio would end up under water. I took out about that much dirt, and loosened up the soil even under that, then added topsoil. Baby shampoo wont kill the grass? How would I apply it?
How have you been watering (when you water)? How often and how long when you do water?
Here is probably my first issue. I planted the grass last October, threw the hay down, then 3 days later got married and went on a honeymoon, so… for the first 2 weeks, it never got watered, then the weather took a down turn and I was only able to start “caring” for it this spring.
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"How high/low are you mowing the grass?"

If asking in inches, I’m not sure, I have not measured, but I have the mower set on the next to last highest setting (almost cutting it as high as possible).