Okay, I admit I did something really stupid.
I’ve set up a live USB stick for Puppy linux. I decided to test out the persistence feature (complete with password and "Heavy" encryption). Everything runs perfectly up to this point. computer shuts off. I turn it back on and puppy starts unpacking itself. Everything is good.

So this is what I do:
Instead of just typing in my password I decide to drop to console.
I then realized I’m nowhere near being a developer and have no experience with the LINUX comandline–I guess windows experience doesn’t help…

I know NO commands for linux. I type "help". This doesn’t work, so I’m a little worried. I don’t know how to shut everything down properly from here.

So like a total n00b I entered the "exit" command. I’m met with this:

"Kernel panic – not syncing: Attempted to kill init!"
Here it just stops. Can I just press the power button without hurting anything? Will this damage my computer or the usb drive/files on usb?

Try this:
Hold the ALT+PrintScreen keys on your keyboard, and type:
REISUB (An easy way to remember this is it’s "Busier" spelled backwards)

If that doesn’t work, then just press the power button.
It shouldn’t harm your computer since the hard drive probably isn’t mounted or being written to.

There is a chance it can screw up files on your USB drive (Most likely the Puppy save file)

Also, to shut down your computer from the command line, do this:
shutdown -h now

Or to reboot:
shutdown -r now

These should also work:
poweroff
reboot