Application of Nernst Equation in Potentiometric titration of Fe2+ with Ce4+
It is an interesting question. Daniel Harris is revising his book with my former mentor. Hope he clarifies this section in the revised version. Your point number 1 is misleading. The reason is that before the titration, theoretically there is no Fe(III). So Nernst equation should not be used- electrode potential is infinite (log 0 is undefined). When you start the titration (Ce (IV) in the burette), the moment you add Ce(IV), it is immediately reduced by Fe(II) to Ce(III). You do not have the Ce(IV/III) couple in the solution. Before the endpoint, Fe(III/II) couple controls the potential of the indicator electrode.

Do you remember what that indicator electrode is made of? It is just a platinum wire and the reference electrode is usually silver-silver chloride electrode, all enclosed in a single unit. The platinum wire is oblivious to iron or cerium. All it "senses" is the charge. Imagine a single Pt electrode dipped in an iron solution and forget about the presence of cerium. Imagine that a metal is a source (sea) of electrons.

The moment you dip the electrode, instantaneous exchange of electrons takes place between the metal and the reducible or oxidizable ions. Electrons can be released by Fe(II) to form Fe(III) and similarly electrons can be gained by Fe(III) to form Fe(II). This exchange rate is dependent on the concentration ratios of Fe(II) and Fe(III).

As a result of this exchange, the Pt metal develops a charge. It is very surprising that you only need to remove a very very very small number of electrons to develop a measurable surface charge. Hence, there is no perceptible change in the concentration of Fe ions. If platinum electrode develops a charge, the interface (solution electrode boundary) develops an opposite charge until equilibrium is achieved.

Now given the fact that Pt electrode is charged i.e., if we connect Pt to another electrode, we can sense the potential difference between the Pt electrode and another electrode, which can be any other electrode. Now that you wish to have a stable. For that purpose you need an electrode whose potential is fixed i.e. a reference electrode.