To be fair, as you continue those quests you learn why he has a dislike of outsiders. It's not simply a case of racism. That is part of the archer story and both of your archer guild companions coming to terms with their personal issues.

As for the Au Ra, I will be genuinely interested in how they deal with the timeline issues. Explaining how an Au Ra got there prior to the rest of the Domans with be a work around.

Then again I never quite figured out what the deal was with Cid's vision of light when he received his goggles.