Man, that battle is pretty misleading but I love how it just overwhelms you. Actually, I think the best part is if you're paying attention, you can tell shit will go down because it takes so long between turns since there are too many enemies for the Saturn to keep track of. It's that barrel that gets you though. You need to get it for the sweet items but once you step over there you're fucked. If you do it right, you can bring Honesty with Thousand as support over there and not trigger enemy spawning at all but where's the fun in that.
I usually use that battle to power level since I want Julian and Gracia to be at least level 20 by the time I get to the next one for reasons.
Primula is a good healer because she can fly and gets summon spells but I usually skip her since you have excellent healers already.
You're right about the shopkeepers. That's totally the developers. You can tell Camelot put everything into SF3 which makes Sega's treachery that much worse.
As for the ending of Scenario One and why it's bullshit
There's no fucking way Domaric would be like "Due to the wishes of my son Medion I will cease this invasion and delay my lifelong dream of hegemony over east Parmecia." That bitch would kill his children to get Aspinia.
