Is instant profitable arbitrage impossible?
Both are possible; in fact, I do both when the opportunity arises.

For #1, for example, I have successfully conducted an arbitrage on UTC, by buying in at Crypto Rush for 0.00018 and selling it on Mintpal for 0.00019. You definitely have some risk here of not executing the trade quickly enough, so look for markets that are reasonably liquid (i.e. relatively low bid-ask spread). I've done similar arbitrages at least five times. It's not going to be super profitable, but it's a nice opportunity to take advantage of.

For #2, it all comes down to what kind of a long position you wish to hold. So for instance, if you wanted to hold 0.2 BTC and 100,000 DOGE in the first place, then it makes sense to spread them across two exchanges, with 0.1 BTC and 50,000 DOGE at each. When the bid of one becomes higher than the ask of the other, execute the arbitrage ASAP. Of course, it goes without saying that you should not attempt this strategy on a coin that you did not intend to gain exposure to in the first place.