You're misusing the guidelines.
First, let's take a look at what the Pathfinder Magic Item Gold Piece Values section has to say on this issue. Turns out, it is specifically addressed.
The correct way to price an item is by comparing its abilities to similar items (see Magic Item Gold Piece Values), and only if there are no similar items should you use the pricing formulas to determine an approximate price for the item. If you discover a loophole that allows an item to have an ability for a much lower price than is given for a comparable item, the GM should require using the price of the item, as that is the standard cost for such an effect. Most of these loopholes stem from trying to get unlimited uses per day of a spell effect from the "command word" or "use-activated or continuous" lines of Table: Estimating Magic Item Gold Piece Values.
Emphasis mine. It then goes on to take Mage Armor as an example of this:
Patrick's wizard wants to create bracers with a continuous mage armor ability, granting the wearer a +4 armor bonus to AC. The formula indicates this would cost 2,000 gp (spell level 1, caster level 1). Jessica reminds him that bracers of armor +4 are priced at 16,000 gp and Patrick's bracers should have that price as well. Patrick agrees, and because he only has 2,000 gp to spend, he decides to spend 1,000 gp of that to craft bracers of armor +1 using the standard bracer prices.
So yes, your Amulet of Mage Armor and Shield is a textbook example of the guidelines gone bad.
This is understandable. The guidelines are famously weak, often breaking with casual use, as you have encountered. This precise case, however, was anticipated and addressed.
The key words are Swift and Next Attack
Swift Actions
In D&D3.5e, you may only perform one swift action per turn, even if it is a mental action. So, you would only be able to activate Dislocator once per turn, at the most.
Next Attack
Multishot and similar abilities and effects produce additional projectiles as additional attacks. When you're firing two arrows, you're really making two attacks. So the one you designate as the "first" attack will be the "next" attack for Dislocator. Even if you could activate it more than once per turn, you'd have to activate it before each attack, meaning it would have to be in-between the arrows produced by Multishot, which isn't possible.
I really liked this question because of the idea of the idea of hitting someone with so many arrows that they poof and appear in the air, but unfortunately, it's not possible with that set up. Alternatively, you could hire four wizards of sufficiently high enough level to simulate the effect in battle.
"Look at what my arrows did!"
The four wizards are high-fiving each other in the background while looking mentally exhausted.
Edit: One thing I neglected to mention is that Dislocator mentions your next "successful" attack. Meaning that if your first three arrows miss and your fourth arrow hits, they would have to make a Will save. Still, you cannot force your opponent to make more than one Will save per turn in this way.
Best Answer
Yes
Firstly, you can always upgrade items by paying the difference (DMG p288):
Flame Tongue is slightly different because it has a unique ability, so that there technically is no +4 Flame Tongue in the books to upgrade to, but according to the FAQ (p.63), you can upgrade it if the DM gives permission:
Based on the examples given in the FAQ, Flame Tongue is a 20,715 gp +1 flaming burst longsword with a unique ability, and costs 2,400 gp more than a standard +1 flaming burst longsword.
You can therefore upgrade your weapon by paying the difference between a +1 flaming burst sword and the item you want to upgrade to.
As for level requirements, being level 12 and able to craft a weapon of up to +4, that means you can give the weapon an enhancement bonus of up to +4. That's actual enhancement bonus, so you can make a +4 weapon with as many special abilities as you like until you hit the hard limit of +10.
This seems to imply that you also need to be level 12 to put a +4 equivalent special ability onto a weapon, though it doesn't specifically say this, so it's a little vague. It doesn't matter at all in your case since the only special ability higher than +4 is vorpal.
In your case, the +1 Flame Tongue is priced as +3 (Flaming Burst property is +2). This means if you upgrade it to +4 Flame Tongue, it is priced as a +6 weapon (plus the 2,400 gp for its special property). You can attach up to +4 in additional special abilities before you hit the +10 hard cap.