I actually like this idea.
Though, I don't really think that the TD chose Serge. I mean, Schala would probably save anyone. After all, Belthasar planned it all, yet it's still not explained why Serge was the one that was heard. Though, I always think that Serge is related to Schala, like as in Magus is related to Schala. Who knows. I know that Magus supposedly exists co-herently in that era, but Serge could always be a reincarnation of Janus from another time or you know, an essence or something like that.
As for Serge saving Lavos - he doesn't. It's Chronopolis that almost saved Lavos, but Lavos couldn't pull Chronopolis far back in time. What Serge is going to do, is that he is the final key. As the arbiter, and until he dies or passes that power, he is the other link to the flame and the other component of Lavos' final transformation. He's the arbiter because he not literally controls the future. It's just his decision. If he runs and doesn't merge with Lavos, Lavos will just evolve later. If Serge defeats him and dies, it's over. If Serge willingly merges with him, it's all over. But if Serge fights, with everything that he has, with his friends, and with the help of the 6 melodies of the 7th element, the Chrono Cross will free Schala and Lavos will be reborn as another being, or go back to Zurvan (I finally understand what Schala was going on about in the end).
As for Schala and the flame. Schala is still the old arbiter, Schala talked through the flame, her mind is probably in sync with Lavos'. The Flame isn't a seperate consciousness, but it is a seperate entity. The flame wouldn't have told her. And remember, at that time of Serge's panther attack, Schala was falling through time, according to the script. If that is so, as she was outside the 1006AD, she could have seen through it parallel in her timestream and reached out and helped. Then she fell into the DBT and got merged. That or Schala was still struggling fighting Lavos, and then heard the crying. W/e.
As for Zealian Style Magic, Luminaire isn't that great. Remember, Crono and co except Magus only have primitive magic compared to all of the Zealians.
As for Queen Zeal, maybe. I still find Schala more of the arbiter as she was the one who controlled the machine. Zeal just went along with Lavos, thinking that he really liked her. I mean, in the end, he really didn't help her. All she did was drain the Mammon Machine's energy for herself.
But Schala - she is special. The fact is that she obviously has some power as she kept Lavos going. I mean, come on. Lavos obviously wasn't totally gona die if he could wait in the DBT till Schala arrived, especially the fact that he can grab onto her and merge, and then later fight through her barrier and fight Serge.