This recipe would scare the crap out of me. It is loaded with a lot of table sugar, which is going to give a bad cidery flavor profile. However, there is a lot of other flavors going on too (grape, strawberry, honey, malt, and lemonade), so maybe all of those flavors overpower any cidery flavors.
Another really important thing to note is that there are absolutely no hops in this recipe! There is no bitterness to counterbalance all of that sweetness!! This is going to be a really sweet, cloying concoction! I think you need to add some hops to the recipe. Something with just a woodsy, earthy bitterness, like the noble hops varieties would probably be fine. Maybe some Kent Goldings, or Fuggles, or similar would work fine. I'd put them in at the beginning of the boil. Use a fruit beer style for guidelines. I'd try to get the IBU's arrow even with the Estimated Original Gravity arrow. If you keep it at about 93 Estimated Orignal Gravity, then you should shoot for about 50 IBU's.
However, if you still want to brew it even though it scares the heck out of me, I would substitute more of the extract in place of a lot of the table sugar. I personally would limit the table sugar to about two pounds. In place of the removed four pounds of table sugar, you could add back approximately 3 pounds or more (whatever your desire is) of the malt extract. You'll get more of a fruited beer flavor, than a bad cider undertone.
1) Looking at the ingredients it mentions 3 lb. of acid malt grains and mentions steeping in the steps, but in the notes where it appears to creator laid out the whole brew process he never mentions the steeping?
He has the profile set as an extract recipe. When you have grains in a recipe, but are not mashing, then it's kind of an assumption that you're going to steep them. Whenever I do an extract with steeping grains, I usually steep between 150F and 160F. If you steep at 175F, you might extract some tannins that you don't want to extract from the acid malt. Bring your boil water up to 1160FF, put your acid malt in a grain bag and steep it for about 30 minutes. Then pull the bag out and let it drip until it stops dripping. Don't squeeze it to get more out of it, as this might squeeze outs some tanniny stuff too. Once it's done dripping, put it aside and put the heat to your boil kettle. When it starts to boil, turn the heat off and put about half of your malt extract into your boil pot and stir it until it is fully dissolved. Then put the heat to it again and commence your boil. Add the rest of your malt extract to the boil kettle with 15 minutes left to go in the boil. Don't forget to turn the heat off and fully dissolve the malt extract so that you don't scorch it on the bottom of your boil kettle.
2) Also in the beginning area it mentions the boil ingredients, but in the notes, its mentioned to only heat to 175, and never mentions a boil at all.
Follow the instructions above.
3) I want to scale the recipe down to a much smaller batch for the first test, but with those questions above I am trying to figure how to fully do so. Can use scale option in Brewsmith I figure as the ingredients are all listed out.
You can scale it. However, you're going to have difficult with the lemonade concentrate. You might be adding a partial can. It also seems like a lot of lemonade concentrate to me! 8 items of lemonade for a 5 gallon batch seems excessive to me? However, I've never tasted this recipe, so it might be the correct amount.
I think your decision to scale this down for the first brew is probably a really good idea!
I also noticed that it lists yeast energizer and yeast nutrient. Yeast energizer is something I usually only use when I have a stuck fermentation, but it is useful in wine making and when there are a lot of "non-barley sugars. I would usually say to only use yeast nutrient, but in this case, since there is honey, table sugar, lemonade concentrate, white grape juice and strawberries, it's probably wise to use both of them, as the recipe states.