Unless the media converter you've bought are specifically marketed as T1 Fiber Extender/Converter, it won't work.
T1 isn't Ethernet even if it's using RJ-45.
Regular media converter are for Copper Ethernet to Fiber Ethernet, not T1 signals
A quick google search with "t1 fiber copper converter" will yield various manufacturers that are making the bona fide converter you need.
That won't work, because both 10.74.1.0/24 and 10.74.2.0/24 are both in use. Not only that, a PtP connection requires a mutual prefix.
Use a different IP range, and a smaller one. Put 10.75.0.1/30 (255.255.255.252) on Arlington X2, and 10.75.0.2/30 (255.255.255.252) on the Dallas X2.
Then on Arlington, add a route: 10.74.2.0/24 -> 10.75.0.2 and on Dallas: 10.74.1.0/24 -> 10.75.0.1.
I've never used a SonicWall before, so I don't know if the VPN will take precedence over the newly installed routes or not. How I would test this is take a single IP from each side's LAN, and route those over the new PtP.
So, on a laptop set as 10.74.2.10 on one side, and 10.74.1.10 on the other, on Arlington, route 10.74.2.10/32 -> 10.75.0.2 and in Dallas, route 10.74.1.10 -> 10.75.0.1. Again, I don't know if the Sonicwalls will bypass the crypto to route these over the ptp, but it might be worth a try. You could also set up a new temporary prefix at each side, and route that before going live.
Lastly, after EOB, set up the routes, see what happens, disable the VPN, and see what happens. If it works, you're done. If not, you've got a documented ordered list of what was done. Backtrack until you get original status-quo working again, and go from there.
Best Answer
We have used /31s in our core (Brocade, Juniper, Cisco) for over three years with no issues whatsoever.
This is a production ISP network, and hence its appropriate to use them in a production environment as long as your kit supports it, and you've tested it