the PEF database is meant to be used for Environmental Footprint studies (and strictly speaking, the free version must not be used in other contexts).
Picking the flow: true, this is somehow your job as a modeler (similar as building a house: there are many possibilities to choose windows). Typically you will use tap water though, and a market and region mix is good if you do not have more specific information.
With different databases you will of course get different results, often though, the pattern somehow remains the same.
Last bullet: Currently not directly, but the PEF database fits to the PEF method pack; we are working on a more direct solution currently.