Yes, the verse concerning Arca Vigraha is like this: "arcasiladhir gurusu naramati vaisnave jati budhi." The meaning is that one should not think of the Deity as made of stone, wood, etc. Another verse is, "Archaiam Evam Paria Ja Pujan Sadraya Hatay." The meaning is that one who worships the Deity with great devotion but doesn't show any devotion to the devotees of the Lord, or doesn't preach Krishna Consciousness for the benefit of the general public, he is in the lower stage of devotional service.
Yes, Sanskrit is spoken not only on Krishna Loka but also in higher planets, of the demigods. It is called the language of God and the demigods. It was spoken also on this planet, when people were all godly, they used to speak in Sanskrit. Sanskrit is the origin of all languages of the civilized peoples. It is most perfect, not only descriptive; the word "Sanskrit" means "the most perfect".