Best way to render a form on a node? I am trying to add a textfield to the bottom of a node (for a specific cck type), that once (an authenticated user) submits, stores the value as a term in a taxonomy vocabulary. 

What is the best way to do so?

I have tried adding the form to my subtheme's node.tpl.php file for a custom cck type. 

I am having trouble with form validation. I'm able to submit the form properly, but get the red borders around the field that needs to be validated, instead of the message; Until I resubmit and the cached error message then shows. I get why it's happening - code executing prior to node.tpl.php load. See - How do I use form_set_error() the right way?.

If Form Builders are not supposed to be called from within a template file, how else can I add a form to a page? I'm sort of working off this  form example tutorial

I started with this - Embed form inside a block - and since added this to my node.tpl - https://gist.github.com/1847060.

I'm still trying to wrap my head around using the forms api, so thanks for any advice.
You want to avoid putting this into your node template. Generally you want to keep "business logic" (any php functions other than print) out of template files. You might be better served by creating this as a block and placing it below or above the node because it is more reuseable. If you don't want to use a block you can use hook_node_view() and add an additional element to $node->content as in the linked example.