I think the elders were going for that, but then the dragon lady had to challenge Arc to a duel. That also worked out for the elders as it would show Arc's strength and abilities, so probably that's why they didn't raise any objections (also, bitching to an elder dragon tends to be bad for your health).
It didn't seem like it at all. No one made any mention (this chapter or the previous) that Arc display his teleport ability. If anything they were dismissive of Arc until the Dragon Lady showed up and challenged him. Heck even the fact that the Dragon Lady seems aware of Arc and proposed to challenge him should be an eye opener for anyone that there may be some validation to the claims of Arc's abilities; unless the Dragon Lady is habitually known to just beat up any random person she sees.
Again, remember that what those fellow elders and top warriors are claiming is pretty damn unbelievable from their perspective.
That'd be fine if they were dismissing everything else that was being reported (war, nigh infinite undead hordes, powerful enemies that can match their strongest warriors, treaties with the humans, etc); yet they had no issue believing said reports with the exception of the parts regarding Arc.
Also if what's claimed is true their whole grand war strategy would revolve around Arc's abilities. They HAVE to be sure everything is going to go like clockwork because if anything is not as claimed to be and planned around for, it will cost them a lot.
Their whole war strategy already revolves around Arc's abilities. Not to mention that's not even their reasoning. They simply can't fathom someone being as powerful (if not more) than their founding chief.
Narratively, that's obviously the case. But to be honest I find their concerns actually valid. There's simply too much at stake and cannot afford to have anything going sideways.
I don't, not since they didn't make any reasonable reasons as to why they don't trust Arc or the words of their fellow Elders. Also what's the point of their council if they don't take the words of their fellow council member into account. Again they didn't even try to ask Arc to display his abilities. Not to mention they already received reports that illustrated some unimaginable events such as their fellow elves being used as a sacrifice to create a Hydra, unimaginable numbers of undead army (someone has to have the magic to create and sustain such a huge army), their strongest warrior (Arian's older sister) taken some damage in a fight, and plenty of others; so I don't see any reason as to why they doubt the reports of Arc's abilities just because it seems unbelievable.