First of all, after having finished upgrading your tools the blacksmith should send it to you via mail. This would make upgrading tools, especially the watering can, more convenient. I came to this idea/solution after not being able to get my watering can on a festival day because the black smith apparently doesn't give a poop about his job on festivals therefore I lost a day on my crops. Secondly, when a festival takes place between 9AM and 2PM you shouldn't end up at 10pm at your house. What was your character doing the other 8 hours? Nobody knows.
I think the businesses being closed is standard fare for games like this. But I do question things like being unable to enter town even when the holiday is being held on the beach. I don't recall a festival being from 9-2 and being kept until 10, which festival was that? I probably wasn't paying attention.. <.<
It doesn't take place between 9 and 2, those are just the times you can arrive to join in. It's made that way so you plan around festival days. The game is all about time management and being aware of festival days is key to that.