Haven’t read this whole thread, but I have to highlight this question seem to be a situation of low risk, but high consequence.
Will everything be ok? Probably.
But what happens if it goes bad?
Tires are cheap compared to bikes and bones🤘
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Again thanks all. Made it through the race just fine and had to lock up the tire avoiding a crash so was happy to have a safe one 
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Something like this happened to me once before on my cross bike. I came down off a fairly large drop and afterwards the tire had a section that looked just like this. I thought I had bent my rim out of true but sure enough, each time I re-seated the tire the bulge was always in the same spot. It rode just fine though so I didn’t take it in for a few weeks. When I did, the technician said that the impact must have stretched the sidewall threads past the point of permanent deformation. Technically this would make the tire a bit weaker in that area so I agree with the advice to change for a race and/or high speed rides. For just puttering around though, it’s probably fine.
I think its some sort of superstition about having to keep it rubber side down.