What am I really seeing here?
The second diagnostic screen does in fact show the RSSI for what ever the Vue is receiving from. In your case, the RSSI received from your repeater. In this mode it has nothing to do with the RSSI value that the repeater received from the VP2 ISS.
I don't have a real Davis repeater, so I can't confirm the other mode (Dip switch 4).
I can offer this:
My Vue console and the ISS are both currently in my workshop. They are both powered by AC adapters. They are separated horizontally by 8 feet and on the same vertical plane. The RSSI ranges anywhere from -38 to -61 at initial startup. The initial frequency correction starts around -12 and very slowly gets better and better. The RSSI then ranges from -37 to -43.
It I put my ISS back on my chimney (single story house) then I'm in the -70's after it has settled down.