The play sand will not mess with this, so no problems there (it is inert, or should be). Things should work much as in the other tank. And I think your target ranges should be fine, depending upon species [more below on this]. And I concur with others that diluting the GH/KH/pH with "pure" water is the better route. Rainwater is good for this too, as it will have an acidic pH and be zero GH/KH (or nearly).
A KH of 7 I would suggest is likely sufficient to prevent the acid buffer from working long-term. And in any event, these substances (any chemicals, additives, etc) are best avoided with characins as they are highly sensitive to these, much more than say cyprinids. If spawning is the aim, definitely no chemicals or additive other than dechlorinator and plant ferts (as minimal as you can) if plants are present.
As for breeding tetra, it depends a lot upon the species. I have near-zero GH/KH tap water, and my tanks run from pH 5 to 6.4; the variance has to do with various factors like wood, fish load, leaves, water changes, and adding Equilibrium to raise the GH in three of my six tanks to various levels. The tetra in my 115g which I maintain at a GH of 4-5 dGH and the pH runs around 6.4 spawn regularly. Species include Diamond Tetra, Rosy Tetra, Beckford pencilfish. The corys also spawn. I don't think the rummys and false rummys do, at least I have never seen them. I have had fry from the others mentioned survive now and then, but with so many fish in this tank (over 100) the eggs have little chance of surviving to hatch.
In my 33g which I just let drop naturally (0.5 dGH, pH is 5 or lower) my wild Nannostomus mortenthaleri pencilfish spawned several times. Various rasbora the same, and now the pygmy sparkling gourami. When I had chocolate gourami, they spawned several times under these conditions and fry survived.
The 70g I maintain around 3 dGH, pH around 6.2, and wild-caught N. eques pencilfish spawn readily, but again rarely do fry survive predation. The wild Farlowella vittata are forever spawning, and I have some fry growing out in the 10g. I also have Carnegiella sp hatchets, Loreto Tetra, Metae (Purple) Tetra and cardinal tetra in this tank, all wild caught, and once I did see a pair of cardinals going through the motions, but only the once. This rather surprised me, as cardinals have a light phobia and very dim lighting is usually suggested if spawning is wanted.
I might be able to offer more when I know the species intended, so feel free to ask.
Byron.