If you use the Hood's low carb milk, that's milk with the lactose taken out; if you use the skim milk powder, you're just adding the lactose back in (together with some whey and casein protein). Kinda breaks even.

I believe if you use a cream, like Half n Half or Light Cream (whatever's 10% milk fat in your area), you will then achieve a Greek Style yogurt, which is, by the way, 10% milk fat.

The starter instructions are just like many commercial processes for yogurt, they add the milk powder ("modified milk ingredients") to add thickness and get a more solid curd, mostly from the protein added (and a little bit from the extra lactose).

I'd go with the cream and let it sit longer out of the fridge, you'll get maximum lactose eaten and maximum set. The SCD link Nancy gave earlier in the thread explains a lot of this stuff in the making of yogurts.