So I took the heater hose off and lose maybe 1/2 qt coolant, estimated.. just drizzled some on the floor.
Is it ok to replenish this much with distilled water?

The coolant feels plenty slipery, does the dealer normally use 50/50? The car won't really see much below feezing temps, so in this case a little more water is OK?

I also need to bleed the air out of the system now.. have one of those yellow funnel kit you place on the radiator cap, do I just warm up the car and but in my experience with this kit (not this car) the coolant will want to rise in the funnel and then what.. will there eventually be a burp and then the coolant will fall back down?

 

you can tell by the look of the color, if it looks green or red then its fine just add in some water to it, you won't have issues in California unless it gets really thinned out.
I just fill it to mostly to the top on a cold motor (do not open the radiator cap until the motor has cooled down completely unless you know what you are doing), start the car with the cap off of the radiator, let it burp itself as its warming up, and then put the cap on after a little bit.
do not open the cap again after you close it, it will shoot stuff out at you, in fact never open it on a warm/hot engine.

 

Take the cap off the radiator put your fill kit in, fill with 1/2 way with water (funnel) bring the car to temp, the thermostat has to open to get the air bubbles out let it burp the water in funnel will go down continue to fill rad till no more hiccups.