1, Yes. The banks has already breached the contract and you can walk away if you prefer.
2. As the bank breached the contract at the first place, you will not breach it again. You can not burn a piece of paper into ash twice, right?
3. It is easy to de-winterize. You just flush the toilet, turn on the sink water, etc. It cost a few hundred dollars to re-winterize.
4. When you turn on the water, well, you will know immediately about the running water pipes. But for the sewer, you need a little bit more time.
It really depends on how long the house has been vacant. check with the neighbors to see that. If the previous owner moved out during late spring or later, I would not be worried too much about water. Pay attention to intentional damages.
For the keys, well, you have zillions of ways to get into the house with the permission of the listing agent. It only cost $90 to have the locksmith to open it too. You are buying something for hundreds of thousand dollars, don't care about $90.