1) Yes. The format and encryption specifics are even documented: https://www.arqbackup.com/arq_data_format.txt
2) Yes. Although if you're after cheap space, Hetzner's storage boxes are the cheapest $/GB I've seen (https://www.hetzner.de/hosting/produktmatrix/storagebox-prod...), with Backblaze B2 close behind.
And while I've got your attention, 1) are Arq backups encrypted and 2) can it back up via SSH to my own storage somewhere - like a cheap VPS with lots of disk space?