Pretty sure that Arcadius was manipulated all along from Yolric (there is the tiny possibility that Arcadius is Yolric and just faked his death at the hands of Guy), so the idea must have come from Yolric. Which kind of makes sense, cause it sets other events, like Royce going to take the throne, with the help of 'the invisible hand'. Yolric is fixated with the Gods, and all he does is setting the world into chaos, in order to observe 'the invisible hand' putting it back into 'peace'. He claims to be older than Gods, being the most powerful creature alive, he gave the magic to the Elfs, allowed the fall of the Empire among many other things, while still not managing to find Nimbus/Kile/Turin.
Not sure about the second point, I guess that Merrick just had an inflated opinion about himself.
While Yolric and Turin are peripherical characters, almost everything is set as a game between them. It is right there with Sanderson's Battle of Gods which happens at the periphery of each book. Quite complex and deep.