Hello,
the team know of the many bugs affecting the Argument Altercation (the speed issue you mentioned is actually a bug that has caused no end of trouble to players on lower end devices). They have been taking note on the issues (both technical and gameplay-related) regarding the Argument Altercation and plan to rework it especially in regard to its difficulty.
While I personally dislike the Argument Altercation as a concept (because I feel it meshes poorly with the rest of the gameplay), I am pretty confident it is not going away. In regards to improving it, I do agree with many of your suggestions, as well with your considerations on its collocation inside a murder mystery visual novel, although I think the matter goes beyond players possibly not being familiar with the genre. Maybe the point of a bullet hell is to try the level again and again until you beat it, but to have it as a minigame at the end with the level of difficulty it presents is jarring (because up to that point the action minigames have been both very different and pretty trivial even on the hardest difficulty) and it grinds the pacing to a halt at the climax of the trial (which is exactly what minigames like the P.T.A. have long been criticised for in Danganronpa). Whereas in order to improve in a bullet hell you have to keep playing the game, in order to improve in the Argument Altercation you have to, in a way, stop playing the game you were playing and switch to a different game for even as much as 20 or 30 minutes, which in my opinion is what makes it particularly frustrating.
In regards to the boss's health, I think it is fine as it is, because moving to the next phase after less than three hits would feel weird. Instead, I think Damon's health should be buffed. Did you know that there is a healing mechanic? You would be forgiven for not noticing, because it is both completely unexplained and extremely weak, only healing 1 HP every time you tear down the boss's shield. I think this could be increased to higher amounts for lower difficulties (and maybe even for higher difficulties, if one wants to encourage riskier plays).
I am not sure how often the developers come here to read the comments, so I would suggest posting your criticism on the official Discord server (in the #eg-staff-questions channel, tagged as Gameplay Feedback) where they are more likely to see it.