1) no, you cannot implement an arms embargo just because a country refuses to partake by whatever means in a conflict. If they supported Russia, this would be another stories, but as things are, this is wrong on so many ways. The US has not sanctioned Germany or France for not partaking in the Iraq war either - and quite frankly, had they done so or would they do so, the days of the US as a reliable ally would be numbered. You might or might not like what Switzerland does, but they are not breaching anyrules by this ... which leads me to
2) yes, yes and yes. And they might actually find a lot of oligarch money there. Take it and support Ukraine with the money they find there. Swiss banking institutions have been a black hole for way too long.
3) you can do so, it wouldn't matter in practice. In order to attack Switzerland, any potential aggressor would have to get through half of Europe anyway. As Switzerland does not have any overseas territories, this kind of formal declaration would be a moot point. So why put up a declaration which doesn't change anythink apart from maybe pissing someone off.