resetting my Nexus 7 recently, I downloaded Android 5.0 on my nexus 7. I hate it, and want to reset my tablet. If I do, will that take me back to the original factory setting (4.1), and if so, can I upgrade to 4.4 kit kat?
No resetting will not put you back on any previous versions of Android. In order to do that you will need to flash whatever version that you want.

I suggest using Wugfresh Nexus Root Toolkit for downgrading. If you decide that you want to go back to stock, unrooted, and locked bootloader you have that option as well. This toolkit will be able to unbrick your device, if needed. It has all the necessary tools to do all the steps to flash another Android version. Plus it'll do the recovery, kernel, and bootloader as well.