I am trying to show that in a topological ring $A$, if left homothecy $x \mapsto ax$ is continuous at $x=0$ for all $a \in A$ and multiplication $\mu$ is continuous at $(0,0)$, then multiplication is continuous. The key identity is $$x_{1}x_{2} - y_{1}y_{2} = x_{1}(x_{2} - y_{2}) + x_{2}(x_{1} - y_{1}) + (x_{1} - y_{1})(x_{2} - y_{2}).$$ Everything works out fine when the ring is a metric space, but I am having some trouble in the general case. If commutativity simplifies things, then assume commutative.
Also, if the ring is a quotient of a topological ring, does it suffice to just show that left homothecy is continuous for all $a$?
As it stands, your key equation is false for noncommutative rings.
With respect to your second question, the quotient of a topological ring is always a topological ring, no further assumptions needed. The fundamental observation is the following:
($\mathcal{R}\times\mathcal{S}$ stands for the equivalence relation on $X\times Y$ whereby $(x,y)\sim(x',y')$ iff $x\mathcal{R}x'$ and $y\mathcal{S}y'$, and $\phi$ is defined as $\phi([x,y])=([x],[y])$) The map $\phi$ is always a continuous bijection, but in general may fail to be a homeomorphism.
If $(A,+,\times)$ is a topological ring, and $I\subset A$ is a two-sided ideal, then the quotient map $A\to A/I$ is open since it is the quotient map of a group action on a space. It then follows very smoothly that addition and multiplication on $A/I$ are continuous maps, since they may be viewed as maps emanating from a quotient space (a colimit) rather than maps emanating from a product of spaces (a limit).
Indeed, if $c$ is addition or multiplication on $A$, and $\tilde{c}$ the quotient operation on $A/I$, then the diagram $$ \begin{array}{ccccc} A\times A &&\xrightarrow{\,c\,}&& A\\ \downarrow &&&&\downarrow\\ \frac{A\times A}{\sim}&\xrightarrow{\sim}&A/I\times A/I&\xrightarrow{\, \tilde{c}\,}&A/I \end{array} $$ proves continuity of $\tilde{c}$.
I assume $(A,+)$ is a topological group, i.e. addition $+:A\times A\to A, (a,b)\mapsto a+b$ and inverse $A\to A, a\mapsto -a$ are known to be continuous.
Let $a\in A$, and let $V$ be a neighborhood of $0$. Because $+$ is continuous, there is a neighborhood $0\in V'\subset V$ such that $V'+V'\subset V$. Since left multiplication by $a$ is continuous at $0$, there exists a neighborhood $W'$ of $0$ such that $aW'\subset V'$. Since multiplication is continuous at $(0,0)$, there exists a neighborhood $W''$ of $0$ such that $W''W''\subset V'$. Now put $W=W'\cap W''$. Since $(A,+)$ is a topological group, the map $A\to A,x\mapsto a+x$ is a homeomorphism, and $a+W$ is an open neighborhood of $a$. Let $a'=a+x\in a+W$. Then $$a'W\subset aW'+W''W''\subset V'+V'\subset V.$$ We have thus proved that under your assumption (no commutativity as of yet),
(In other words, the product map $\mu:A\times A\to A$ is actually continuous at all points of $A\times\lbrace 0\rbrace$.)
Now to prove continuity of multiplication when $A$ is commutative. Let $x_0,y_0\in A$. For all $x,y\in A$, $$\begin{matrix} xy-x_0y_0&=&x(y-y_0)+(x-x_0)y_0\\ &=&x(y-y_0)+y_0(x-x_0) \end{matrix}$$ Let $V_{x_0y_0}=x_0y_0+V$ be a neighborhood of $x_0y_0$, and $0\in V'\subset V$ a neighborhood of $0$ such that $V'+V'\subset V$. From the above, it follows that there are neighborhoods $W_{x_0}',W_{y_0}',W_0$ of $x_0,y_0,0$ respectively such that $W_{x_0}'W_0\subset V'$ and $W_{y_0}'W_0\subset V'$. Now define $W_{x_0}=W_{x_0}'\cap\big(x_0+W_{0}\big)$ and $W_{y_0}=W_{y_0}'\cap\big(y_0+W_{0}\big)$. If $\mu:A\times A\to A$ denotes multiplication, then $$\mu(W_{x_0}\times W_{y_0})\subset V_{x_0y_0}$$ so that $\mu$ is continuous at $(x_0,y_0)$.