...My main question is whether the velocity issue is only at the point of the valve closing or anywhere along the supply pipe...
...Second question is whether or not hammer arresters are ever recommended or considered useful...
#1. It doesn't matter where along the supply pipe you are exceeding "speed limits", it can cause a problem.
Water hammer is basically caused by water with excessive kinetic energy. Basically, when water is flowing, it has a certain amount of kinetic energy. When a valve suddenly closes, that water almost instantly quits moving. That kinetic energy has to go somewhere. One of the ways this energy is dissipated is by creating a pressure spike in the water pipes (hence the reason you want to use PVC rated for 200+psi even though your water pressure is 75psi). Kinetic energy doubles as water volume doubles. But kinetic energy quadruples when water speed doubles. So the real issue of violating the 5ft/sec "speed limit" is that water moving at over 5ft/sec has a LOT of kinetic energy in it.
When a valve suddenly closes, all the water behind that valve essentially crashes all at once because water is a virtually incompressible fluid. It's like a stack of workout weights dropped on the floor. It doesn't mater if you have a 10 pound weight on top of a 100 pound weight or a 100 pound weight on top of a 10 pound weight. Either way, you will have 110 pounds crashing on the floor at once.
Now water hammer has a lot of factors that go into it. So just because you have a section of pipe violating the 5ft/sec doesn't mean you are going to have water hammer. The valves you use will play more into it than the pipe. You can even get water hammer if all the water stays under the 5ft/sec speed limit. The reason is because the speed at which the valve closes has a huge impact on water hammer. Basically, a valve does not close instantaneously. During the time the valve is closing, it's like putting the breaks on the water and slowing it down. The "crash" doesn't happen until the point at which the valve completely closes. So if the valve closes slowly, it's like putting the breaks on a car travelling at a brick wall at 100mph. If the brakes are applied over a long enough time, the car might only be travelling about 5mph when it hits the brick wall. But if the valve closes quickly, it's like not putting on the brakes until you are 20 feet from the wall. Yea, you'll have enough time to slow down by maybe 10mph, but that means you'll hit the wall as 90mph. OK, I'm starting to ramble a bit on the subject, so at this point I'll refer you to
www.irrigationtutorials.com. The author has a whole section where he attempts to describe the causes of water hammer. The only thing I have to add is that if you would have used 1-1/4" Sch 80 rather than 1" Sch 80, you'd be way below that 5ft/sec "speed limit". But if for sure you will NOT exceed 12gpm, the charts indicate the water will only be moving at about 5.35ft/sec. Not a gross violation of the speed limit, so you MIGHT be ok.
#2 As for an arrestor, that same web author pretty much claims that they never work. As I see it, those arrestors are like placing a spring on the front of that car heading towards the brick wall. If the car is hitting the brick wall at 10mph, adding that spring might help. But with irrigation situations, you're usually dealing with such large volumes of water, when water hammer occurs, it's usually because the car is hitting the wall at over 50mph. At that speed, a spring on the front of the car isn't going to make any significant different.