For Question (1):
He could not bring himself to write a book that was dull/boring. In other words, something caused him to step away from writing a bad novel. If someone where deteriorating/declining that would likely cause them to write bad novels. They would fit if the sentence were: "It is a testimony to Roth's _____ that he wrote a book as dull and flat as his conception for his novel..." But he could not do this, so it suggests that he is not deteriorating!
Persistence does not seem to make sense here - for it to work it would have to have the implication that through lots of work he bettered the idea.
Ambition may fit, but there is no word similar enough to work.
Genius / Talent are synonymous in this context and they suggest that he has a great ability! That is why they are the correct choices.
I would not come to this answer through the sense of irony. It comes from the fact that his original conception was terrible, but he knew better than to go for it. Hopefully the above description helps arrive at the answer in a less convoluted fashion!
The idea here is that "For an artist with limited talent" makes the rest of the sentence seem unjustified. For instance, you would never say: "For an artist with immense talent, Van Gogh was given scrupulous talent..." because that is expected of an artist with great talent!
"For" is acting as a comparison here. It is basically saying that he was given plenty of attention considering his lack of skill. Moving that clause to the end of the sentence (which can be done with introductory phrases) helps to clarify.
Mario was given (i) _____ attention, for an artist of such circumscribed talent, many connoisseurs (ii) ____ over works that warranted nothing more than a(n) (iii) _____ glance.
If the experts had given little attention; if the connoisseurs gave it little attention, or if the works warranted a detailed look this sentence would not make sense, as all of those things are to be expected of an artist with limited talent.
Do not think of "for" as "because" in this case. It is not "because" he was limited in his talent. Experts gave him plenty of attention despite his limited talent.