Assuming you're using NT authentication:

For authentication:

1) SP uses AD to identify  what security  groups the connecting user
belongs to.
2) SP checks the SP resource user  permissions against the AD user and
the group list from step 1 for a match.
3) If there's a match, SP grants the user access  as specified in the
permissions list. (I'm not sure what happens if there are multiple
matches. This may be the source of the 'never use nested SP groups  with
AD groups' bug.)

For profile  creation:

1) SP checks to see if the authenticated user who is connecting user has
a profile. If not, it creates one.
2) OPTIONAL: If you choose to import profiles  from AD, scheduled or
otherwise, it sets up new profiles as it finds users in AD who do not
have a profile. I don't believe it ever deletes old profiles.

So am I correct in my interpretation of your comments
that as long as SharePoint can verify that my utility  account is an
active account  in the domain or NT group, it doesn't matter that it
doesn't have a user  profile associated with it?

Yes, but there's no avoiding a user  profile for that account. As soon as
you connect with that account, it will set one up for it, even though
it's not part of your profile  import.