Rant over, an update regarding my question that no one helped with in the hopes that it proves useful when troubleshooting other phones.
Audio testing/recording programs - will pretty much always use the bottom mic.
Normal phonecalls - expect to hear nothing... The active noise cancellation will rule your voice as being too quiet and transmit nothing if there is an issue with the lower mic.
Google Now/voice - grey circle will fluctuate with voice but never cause a red mic icon or recognise your voice.
All of these things point to a lower microphone issue.
Speakerphone uses the top microphone, so that's an indicator the top mic has failed.
I found out the above from just going with my gut feeling and buying a replacement USB flex ( bought nexus with knackered screen on eBay for £11).
Coincidentally the nexus is pretty damn watertight.
Mine was fully submerged for a good 5 seconds or more in about 20cm of water, placed in sealed bag of silica gel kitty litter for 3 days and when taking apart to replace USB flex noticed that the water detection stickers inside weren't the slightest bit pink, in fact they looked pristine with no signs of water damage throughout the phone, no residual marks or corrosion.