I suggest 7.1.2 68k as the best version of 7.1.x. It is the very last version of the 7.1.x series, and It has the latest System (7.1.2) and Finder (7.1.4) that was ever available for the 68k series while allows for threading (with the correct extension) and scriptable actions (requires the installation of AppleScript), two things which you will find are needed for some programs. It also allows for some compatibility with some software that requires 7.5.x. (since Finder 7.1.4 actually overlaps with the very first version of 7.5). It is also compatible with "Appearance Manager" if you run into a program that wants that (just make sure to copy over the System 7 specific config file if you still want your system to look like System 7.1.x but have the program in question function).
Also, don't trust the compatibility checker, it doesn't exactly work correctly (as in, it told you to ditch your enabler, which, of course, prevented your system from functioning). Your best bet is to install your target OS and if you run into any trouble, run the extensions and figure out which one is the problem yourself. Or yank all your extensions, and put them back 1 at a time, makes it easy to find any trouble right away.
Overall, you'll find 7.1.2 68k is fairly tolerant of bad extensions. I've tried plenty of bad extensions over the years, and never had any trouble excising them without any complications. I have found it is compatible with extensions that were introduced with MacOS 8.1.
Furthermore, a base installation of 7.1.2 68k with a few critical extensions will only consume ~3.0 MB of RAM, which is rather lean, for any Mac that is an SE/30 or newer. I wouldn't suggest it for anything Mac SE or older since that leaves you with less than a meg of ram to work with. I also find it to be quite speedy, compared to 7.5.x (with 7.5.3 being the most common, 7.5.5 the second most common).
You need to use 7.1.1 Pro or 7.1 as a base for 7.1.2 68k, it only allows for upgrades, you can't do a new installation of 7.1.2 68k directly. I'm honestly not sure why. It seems to be a limitation of the installer (Note to self: take installer apart and remove this limitation)