No! That was an easy one.
Usually, yes. My experience isn't on the utility side, but they do have their own protective systems in place to protect their equipment.
Breakers and fuses trip when a current level is maintained for a certain period of time (usually the higher the current the less time it has to be maintained to trip the device). It looks like in this case the arcing, while dramatic, reduced the current enough that it didn't trip the protective device for a while, or until the arcing damaged enough insulation that a new arc started that exceeded the current level or time duration in order to trip the upstream device.