1. Normal damage is just fine.
Some elitists may discourage you, but you can totally use only normal damage weapons and do not much worse than those with "proper" equipment. Feel free to use amputator instead of other brandishes, pepperbox instead of blitz/repeater, valiance instead of arcana/riftlocker/phantamos, and iron slug is actually more useful than callahan or winter grave. Some normal weapons (troika, calibur, blast bomb to name a few) are kind of bad, but not primarily because of their damage type.

2. Probably the opposite, considering the recent heart pendant nerf.
Upgrading weapons is still fine-ish though, since you can grind over a rad a minute in DaN and eternal orbs are now essentially free. A bit of a pain, but it is doable.

5. Most vanguards seem to just grind FSC endlessly, but arcade is still being played.
I personally do arcade runs more often than FSC runs and a good gate can easily get you as many radiants as a FSC run.

Yes, dreams and nightmares. Eternal orbs are essentially free because you get them MUCH faster than radiants, I would guess around half a dozen times as fast (proportionally to how many you need per item), so unless you craft a LOT of non-weapon items you will still be limited by radiants.

1. Normal damage has the same value that it always has always had. It works on everything, but specialized damage is better. Maybe there's one exception to note: Since the 2014 gunner update, the Magnus-line charge attacks have been so powerful, that you might as well charge Iron Slug rather than the theoretically better Callahan and Winter Grave.

2. The only big grind is for Radiant Fire Crystals. I have not heard of any plans to reduce that grind. The game has seen small improvements recently (thanks, Grey Havens), but you should not expect massive content expansion.

3. I'm not sure that I get your point. You want new weapons and armor? See 2. Or you want a more exciting after-market for recipes? That would require more new players.

4. Bombing is popular. Its popularity might decline, if more players are forced to play alone, because of general decline in player base. I have not heard of any plan to re-balance armor and damage, to make defense more important. That would be a huge change to the game design.

5. The statistics displayed on armor and weapons have been buggy, or at least difficult to understand, since the launch of the game in 2011.

6. I run the Arcade regularly. I haven't run FSC in years.

I personally don't care that much about the loot boxes as long as they don't affect gameplay and unfortunately the game factually just isn't at that point. I imagine it's pretty hectic to try and control an economy without suplexing the entire thing every time it goes a little too far in some way.

Right now, there exist things like mixmasters, orbit guns (or any equinox weapon), and wands which are all unique weapons that only come from lootboxes. For the mixers and orbit guns specifically, asking prices typically go for multiple hundreds of real life dollars worth of energy. Wands are less crazy, but afaik someone looking to buy one now would still have to spend like $50 if they didn't want to spend weeks grinding crowns to get one. We also have a good handful of shields that have unique resistances from anything else in the game.

Splitting off from prize boxes specifically, there are still more pieces of unique equipment that are unbearably hard to get without paying some serious, tangible cash. Somnambulist Totems come to mind first. Each one goes for over 10 million crowns (I don't know how much in energy that is but it's at least more than $400), and you currently need 2 of them to reach maximum movement speed bonuses. These can only be very rarely dropped from slime lockboxes which already cost 75k crowns to open each time. Next we have the Black Kat event as a whole. Kat Books are such a rare drop that they go for at least $50 last I checked, and a whole entire boss fight is locked behind them. Not only that, but you need to kill that boss a good number of times to make a 5* kat armor.

I think resolving these issues would be a HUGE step in improving the game's monetization. I understand very well that the game needs to make money somehow for any of us to have the luxury of continuing to play it, but I really can't imagine allowing these kinds of egregious prices to exist is essential to achieving that and I really hope to see these kinds of unique equipment made more accessible to the average F2P player.