Q) I'm a bit confused about armor.  If I were to let my armor piece go down to 70& con, what is affected other than bonuses?

A) Your biggest problem would be the loss of Armor Factor. The potential AF your armor can provide is always multiplied by your armor’s current condition (along with quality + the bonus). If your armor is at 70% condition, you’re going to miss out on a lot of AF. For instead of 102AF, you might only end up with only 71AF.

Q) I was just wondering what the point of Arsonach in Cathal Valley is, does he have any significant drops? Also, I was wondering the same thing pertaining to the burning man in Cathal Valley.     

A) Arsonach is just an errant fire lord that the dead reckoners summon.  Both Arsonach and the 'burning man' are just flavor mobs.  They do have drops, but nothing that is unique to them.  At some point we might go back and tell the story of the 'burning man' and why he haunts the tower at the end of Cathal Valley or where the dead reckoners came from and why they want to summon Arsonach, but for now we leave that to your imagination.