Because Khromarium is such a melting pot of races and cultures, there will be many coins from many foreign mints floating around. The important thing is usually the purity of the metals and the weight of the coins. If those criteria are met, it's not likely that many would notice in a city of 30,000 to 40,000 people. Their own mint, which would feature Xathoqqua and maybe some of the oligarchs, would be the most commonly seen coin, regardless of other mints showing up. But I think if Apollo zealots are seeking to outshine Xathoqqua followers, there could indeed be trouble. I would think that Xathoqquans would seek to destroy the sacred flame if they knew about it -- but that sort of thing is up to you. I would say that if you players are looking to stir up something, let them do it and then deal with whatever repercussions you think should come their way as a result of it. It sounds like a fun campaign!

I would say there is no "incorrect" interpretation.

You game, your arc.

If you're asking if the Hyperboreans practiced slavery when they had political power, they definitely did according to the Referee's Manual ("Along the way they noted the advent of terrible beasts and monsters, as well as the infiltration of savages; these latter were paid no more heed than apes or dogs to be slaughtered or enslaved as whims dictated."). Whether a specific Hyperborean king would be interested in perpetuating the institution if restored to life and power is your call. I guess it depends if you and your players are interested in delving into what can be a distasteful subject.