The armrest down issue is i believe to reduce sideways movement if things get a little tricky in an emergency.
At my airline the only arm rest that are required to be down are the aisle rests for takeoff and landing. They are labeled on the rest. I work for an airline that requires passengers to buy two seats if they can not fit in one.
In the overwing exit rows. If you need a seat belt extension you can not sit there.
If I recall correctly, this has already been to the courts in the US. The answer was (I think) that the airline needs to provide seats of the right size.
No, the airline can make you pay for two seats if you can not fit in one seat.