I am not particularly familiar with Cosmology. I'm sure others can answer your questions much better, but here are a few of my thoughts that don't take into account dark matter and dark energy.
I understand that as the universe expands, there is supposed formation
of matter due to dark energy,and with an increase in mass comes and
increase in overall gravitational potential energy in the universe as
a whole.
Gravitational potential energy becomes more negative with increasing mass, and more positive (increases) with increasing separation. So to the extent that the separation of normal mass (I think they call it baryonic mass) appears to be increasing due to expansion of the universe, that alone will cause an increase in gravitational potential energy.
That being said isn't the rate of gravitational potential increase
equal to the rate of universal expansion where this energy might be
converted to the kinetic energy for this expansion?
For an isolated system one normally associates a decrease in potential energy with an
increase in kinetic energy, not the other way around. Maybe its different in cosmology.
With these two cancelling each other out, what would remain is the
distance between universal bodies of great mass increasing, which
should reduce the gravitational potential energies between them,
reducing the total GPE of the universe as it expands.
Like I said, we normally associate an decrease in potential energy cancelling out an increase in kinetic energy, for conservation of energy.
Is this confusion due to the input of energy into the closed system
that is our universe or am i just thinking about it the wrong way?
Can't say. But maybe the confusion stems from thinking gravitational potential energy decreases with increasing separation of mass.
Hope this helps.