I'm going to narrow your question to the following first paragraph:
I don't understand how all of these amazing analytic properties (global extrapolations from local properties/holomorphic implies infinitely holomorphic) can come from just algebraically adjoining the square root of -1.
There are three questions hidden here: Why $-1$? Why the square root (as opposed to, say, the cube root)? And how do these produce "these amazing analytic properties"?
The other answer and the question John Kyon linked in comments give excellent answers to the third question. To quickly summarize, holomorphisms are nice, because Cauchy's formula and shifting contours give us the implication $\text{integrable}\Rightarrow\text{differentiable}$. We get Cauchy's formula and shifting contours from the Cauchy-Riemann equations, and the CR-equations arise because we want the derivative of a $\mathbb{C}\to\mathbb{C}$ function at a given point to itself be an element of $\mathbb{C}$.
But this leaves the first two questions more mysterious. We can generalize the construction of $\mathbb{C}$ quite substantially: given a commutative ring $R\leq\mathbb{R}$ and an $R$-algebra $A$, we can ask about the functions $A\to A$ with derivatives given by the multiplication action of $A$ on itself. For example, we could always look at numbers of the form $a+b\sqrt{-2}$ instead of $a+b\sqrt{-1}$. Of course, it turns out that those numbers are just $\mathbb{C}$ again…but can you be sure this isn't just a bad example? Why isn't there just as nice a theory for these other algebras? Why don't we hear about them?
The answer is that there are (essentially) no other algebras. We need to have some sort of underlying complete field in order to define derivatives. So we need to start with $R=\mathbb{R}$ above. But then abstract algebra tells us that, since $\mathbb{R}$ is a field, any commutative, finite-dimensional $\mathbb{R}$-algebra is a direct sum (as $\mathbb{R}$-algebras) of field extensions of $\mathbb{R}$. So the $A$ we wanted to analyze above is built out of objects like $\mathbb{C}=\mathbb{R}(\sqrt{-1})$…or $\mathbb{R}(\sqrt{-2})$.
So what sort of numbers can we adjoin to $\mathbb{R}$ to get something bigger than $\mathbb{R}$? By a Galois-theoretic argument (see Dummit and Foote, section 14.6), the answer is precisely "square roots of negative numbers." Moreover, those additions give all of $\mathbb{C}$, by comparing the dimensions as $\mathbb{R}$-vector spaces. So if we create an algebra by adjoining a different square root, we still get $\mathbb{C}$, but with a weird coordinatization that makes no geometric sense. We might as well use the coordinatization that gives good geometry!