But in terms of training is it better to run hard up a moderate hill or kill yourself on a really steep hill where you're on your toes the whole time? Same with biking. Should I power up a short hill or grind up a "use low gear" hill. Which is better? My goal is to get faster by raising my lactic threshhold.

Ride the steepest hill you can find that you can conquer without putting your foot down or pulling over to catch your breath. Time yourself going up that hill. Then strive to shave down that time each training session that involves that hill.
Also, run up that hill once in a while too.

I've wondered this too, i have this hill by me that i can get about 1/3-1/2 of the way up maintaining a decent speed, but then i always end up crawling up the last part. Every time i do repeats on it i get a little further up, so i know i'm improving, but i often consider taking a smaller hill that i know i could get up to raise my fitness faster.

I choose more the moderate hills, but that's b/c I've come to a complete stop on some of the more extreme hills in the area and then walk the rest of the way up...it's embarrasing. Someday I'll work my way to them. I'd say work on a challenging hill you can complete I guess.

My poor hill skills aside, I still find myself passing on the hills (albeit moderate ones) in races. Could just be the road bike advantage since I don't have a tri-bike yet