Yes, I think you are right on all counts.
I tried muting an account but I could still see their post on my feed that somebody I follow had resteemed. I had upvoted the post: would that affect the muting?
The blockchain stores it as 'ignore', so I went with that, but I agree with you, mute would be more understandable.
I believe consistency is important: either they change steem or they change steemit. Thoughts?
I am not 100% sure how muting works actually, thats a question for the steemit chat I think.
Often times whats stored in a database is different to what is displayed to the end user. I think it it is ok that the two differ.