1. Instead of 1 inch arms on each end 1:1 suppose you go with 1/2 inch arms on each side. Do you then increase the torque available in the 1:1 ratio by 50%. Or, overall is it still the same as the oz/inch rating for the servo.
If you opt for 1/2" EACH END, you get exactly the same results in terms of actual torque transferred to the control surface. The only advantages of using smaller control horns are maybe price, and the fact that you have a more compact setup, which in most cases is not needed. There are some disadvantages of using smaller control horns. The most important IMO is that the smallest slop in the linkage will be much more apparent so higher quality hardware is a must so price is no longer and advantage. Another thing to consider is the force carried by the pushrod. If you have a 100 oz.in servo with a 1/2 control horn, you get 200 oz. of FORCE in the pushrod. On the other end, you have 200 oz. of FORCE that is converted to 100 oz.in TORQUE through a 1/2" control arm.
In short, it is not the servo arm that produces torque, it is the motor and gear ratio in the servo that produce torque so no matter the servo arm you put, you will all the time get the servo rated torque.
2. Doesn't the force the servo exherts lessen as it nears the end of its range due to the force vector no longer being 90 degrees to the pushrod.
The force does not lessen, as the control surface horn is also in the same situation. The pushrod will work harder on full deflection than neutral so it makes it even more important to use the largest servo and control arms as practically possible.
All the above is said considering a 1:1 ratio between servo and control surface.