You are correct about their relationship. Notice also that Ariana died when Dumbledore was 18 and Grindelwald was 16. (The whole Dumbledore-Grindelwald timeline is sort of screwy, since they part ways and then fight 46 years later, and yet the duel isn't really separated from their impetuous youth in most of the descriptions I've seen.)

I think that the whole thing about the wielder of the Elder Wand being unbeatable in a duel was mythic exaggeration in the original canon; it was just a lot more powerful than ordinary wands.

Very possibly, especially given that the Deathly Hallows are seen as mythical rather than real by most wizards. Even so, beating someone with a strong equipment edge (and presumably a strong Dark ritual edge) through virtue of superior talent, intelligence, and endurance is remarkable. It would be one thing if, like Grindelwald, he stole the wand from its previous owner, or like the second owner he murdered Grindelwald in the middle of the night. Instead, he stood up to a oblubbq pehfu for 20 hours, waiting for his opponent to surrender through exhaustion.