Wikipedia (Near-Earth Supernova) says that a 25 ly away supernova would wipe out half the ozone layer so that's probably the lower bound for what we want
Nah, happiness should asymptotically approach 0 happiness as distance increases, due to decreased brightness. Tho, I guess there could be a discontinuity at the crossover point of where we can no longer observe it and the happiness we can extract from understanding that there are those so far away we can never see them?
There's something to be said for very early supernovae. I'm sure they'd all be giddy for something beyond 13 billion light-years (or whatever that works out to in red shift).
At some distance, we can no longer see the stars or even the galaxy. A supernova will allow us to see in really distant past, maybe at the first generation with some really good lensing.