I would cut it to 2 inches. Yes I know about the 1/3 rule, but you are in Canada, cooler temps, and you are watering daily, the grass can handle it every now and then. Your KBG seed can handle being walked on pre germination. I would probably mulch mow as using the bag can suck up some seed and topdressing, and I would probably double cut it, the first cut north to south at around 3.5 inches, the second cut east to west at 2 inches. This will also make your clippings much smaller.

When watering new seed just keep it damp don't overwater. For what it's worth I've overseeded my KBG 3 times now. I mowed it at 2-21/2" as tiemco said and I didn't worry about it. Most of it comes in fine eventually--gotta have patience of Job.

Thanks for the awesome advice guys! I mowed it down to 2 inches patience is definitely key! 1 more week to go! I can't wait!