ARP is a Layer 2 mechanism. ARP resolves ip addresses to MAC addresses.
The volume of ARP traffic on your network is immaterial to whether or not you use your Layer 3 switch as a router or use a "traditional" router.
If your servers are all in the same layer 3 network then no routing would be taking place to begin with as the traffic wouldn't be ...
The answer to this is yes, but depending on speed you need to spend a LOT of money. High end switches basically run a complete operating system and can handle OSPF, BGP and other things. Depending on speed and requirements, though, the client may decide that another rack (in price) is not worth it.
And if so, can we statically route to each Server in the ...
Use the bridge driver.
The bridge is a software implementation of a Layer 2 switch, where each interface added into the bridge is a switchport.
Let's say you have your 4 i350 ports in bridge br0 with two other PCs plugged in:
[ Remote PC A - MAC aa:aa:aa:aa:aa ] ---- [ i350 #1 ] ---- .------------.
[ i350 #2 ] ---- | ...