I think the Devil Bringer arm is nothing more than something they threw in to make the gameplay more appealing. To do something original, if you will. When you look at my avatar, you can see that Nero was most likely intended to have a full Devil Trigger, and his arm might not have had the same ghost-like properties as it does now. I never quite understood what the arm had to do with anything. Perhaps nothing.
The word Devil's arm was misinterpreted a few times as meaning 'the arm of a devil (Nero Angelo)', when it in fact means 'demonic weapon'. Yamato is a Devil Arm, and so are Rebellion and the other weapons. Same as the word 'firearm'. At the end of the game, Nero implies that he's always had the DB in some form: ''You know, God, I always hated that you made my arm like this. But now, with it, I can destroy this thing. Who would've thought.'' His being attacked may have simply awakened the arm fully, like a Devil Trigger.
Nero doesn't have more blue than red. His clothes have equal amounts of blue and red. Blue coat, red undercoat, red hood. Red and blue Devil Bringer. Red Queen, Blue Rose. Yes, when using the Yamato, he gets a blue demon floating above him, but that's not so surprising, since Yamato seems to be associated with blue, and Rebellion with the color red. Dante represents Sparda's more human, emotional side and Vergil represents the cool, power-hungry demonic side. Nero is a combination of that. It's a theme throughout the game; is Nero a demon or a human? In the end, he says ''and if I become a demon, so be it. I will endure the exile. Anything to protect her.'' What exile? And since when would Nero sound so dignified? It really sounded like something Sparda would say. It's basically equal and opposite to Sparda's story. Berial even says ''you are just like he was'', referring to Sparda, whom he met or saw 2000 years before.
So much stuff about Sparda, and so little about Vergil. Rather more about Yamato than Vergil.
But I do have to point out that Capcom considered turning Nero into something much more Vergil-like. I saw art of him wearing white and blue, black and white and so on, with a more regal appearance.
I came to some conclusions in Nero's Origins. Here they are.
Nero is not:
1. Nero is NOT Vergil's son, since Vergil would've conceived Nero at the age of twelve. Besides, he doesn't care much for humans, and he certainly wouldn't want a - for the most part human - child.
2. Nero is not a third son of Sparda, since Sparda died before Eva did, and Eva died when Dante was eight. So even if Sparda had died at the same time as Eva (29 - 8 = 21), Nero would have to be 21, not 17.
3. Nero is not Vergil's or Sparda's reincarnation, since reincarnation means that ONLY THE SPIRIT goes into a different body, making it impossible for Nero to have the blood of Sparda (and white hair).
4. Nero is not Dante's son either, for the same first reason noted at option 1. Besides, Dante isn't the kind of person who would have a child, IMO.
Nero could be:
1. He could be a weaker clone of Sparda, left at the orphanage in Fortuna by the person who created him, perhaps hoping that the Order of the Sword would take Nero in. And no, clones don't have to look identical to the person who was cloned.
2. He could be an experiment, somehow created by use of Sparda's blood. It could be that, unlike donated human blood that comes into the bloodstream of the recipient human, the blood of demons doesn't disappear after a while.
3. He could be the son of one of Sparda's relatives. Why? Because Sanctus said ''a descendant of Sparda's blood'', 'blood' meaning 'kindred/relatives' (look up 'blood' at merriam-webster).
This means that Nero could be a half-demon like Dante and Vergil, which is possible, since there is concept art of Nero having a full Devil Trigger body (my avatar).
4. It could also be that Nero (especially his arm) was a character created by Capcom without much thought put into it.
We know that Nero has the blood of Sparda. Quote: ''I must salute a man who carries the blood of Sparda'' - Sanctus. Also: ''a descendant of Sparda's blood'' (also a quote from Sanctus).
Since Nero has always had white hair, it makes the premise of him being a descendant of Sparda (OR a clone/an experiment created by use of Sparda's blood) quite likely.
As for Vergil's connection to Nero:
Vergil's soul is inside the Yamato. I think Nero heard Vergil call out ''Power. Give me more power!'' from inside the Yamato. Nero was in Mitis Forest at the time, which isn't far from Agnus's lab, where the Yamato was. Vergil echoed that line, probably because the Yamato was broken, and Vergil's power was weak because of it.