Thanks for the information, it is appreciated.
If the arcing is from the rotary switch, something definitely is wrong with the switch and it needs replacing.
That should not be happening.
The larger one of course is a good choice, looking at the fan installed.
I am sure at startup on the fan, it has a much higher inrush than the operating 1.5 amps in its specifications.
That it self may have led or will lead to premature failures.
I would want the 1DGV2
Speed Control, Rotary, Adjustable, Voltage 115, Max Amps 6, Max Wattage 720
It is double what you have in place now as you stated.