You're right in my neck of the woods, but fly fishing is about the only outdoors thing I don't really do.
I do hike along a lot of the trout streams because those areas are beautiful and they're maintained public accesses. Coldwater Creek between Cresco and Bluffton is incredibly beautiful, and hiking back to the mouth of Coldwater Cave is completely worth it. Bear Creek around Highlandville is really popular, and I know a lot of folks who have had good luck at Bigalk Creek north of Cresco, as well as just pulling trout of the Upper Iowa with a regular rod and reel.
I don't know about bait shops per se, but Outdoors & More in Cresco is a nice little locally owned sporting goods shop that has fishing supplies. There's a larger sport shop in Decorah (Hibberts - think it's a chain) but I've never been in there.
For groceries and supplies, you're pretty set between Cresco and Decorah. Both have Fareways, Cresco has Dollar Fresh (small town HyVee) and Decorah has a half-assed normal HyVee and SuperWalmart. For booze, I highly recommend Ox & Wren in Cresco. It's a very nice locally owned liquor store with a really good selection and plenty of Iowa beers. Decorah Hy Vee Wine & Spirits is excellent too (only part of the store on par with HyVee standards, IM).
For a bite to eat, I'm a huge fan of Atomic Pizza in Cresco and Fireman's Inn in Ridgeway. Both have great pizza, good craft beer selection, and a diverse menu beyond the pizza. I would give Atomic the nod on the pizza, and Fireman's the nod on sandwiches although I love Fireman's pizza and Atomic's sandwiches. Can't go wrong with either, IMO. The Decorah eateries are fairly well known, and I like to spread the love to the surrounding areas a bit. Both of these places are serious small town Iowa gems.
If you're going to hit any of the breweries, both Pivo in Calmar and Pulpit Rock in Decorah are great breweries with ISU connections. One of Pulpit's head brewers is an old buddy of mine from ISU, and Pivo is owned/ran by a married couple of ISU alums. Toppling Goliath is what everyone knows, and they make great beer, but I didn't feel it needed much highlighting.
Enjoy the Driftless Area in early Fall. Iowa doesn't get any better, IMO.