I'm sure others on here will be able to help you more than I can, but I would say that for the moment, it's too soon to just let the new dog immediately "into the fray." It sounds like you might need to take a step back and kind of start over, and gradually introduce the new dog into your pack. There are a lot of good threads on here about how to go about doing just that.
Most likely, the blind dog, not being able to see, is unable to read the body language that Arizona is sending out (likely signals of dominance). Arizona, seeing that this dog doesn't react the way he expects him to (submissively), doesn't quite know what to think of him and thus reacts to the new dog's lack of response. That sounds confusing, so do you get what I mean?
Your existing dogs are still adjusting from your loss, and this new guy with "weird" mixed body language/communication comes along, making things more confusing. You were smart in having your daughter's friend leave, because that's just adding one more thing to an already chaotic situation. All of these energies together stress all of the dogs, making them likely to fight. It may not necessarily be a dominance issue, or taking advantage of the new dog's handicap.
It will take at least a few weeks for your dogs to learn how to communicate with the new dog, and vice versa. Blind dogs can make it fine (we even had one come to daycare with her normal sister), but it will take time for him to get used to your family and vice versa. It definitely makes it more complicated than introducing a new dog, but I would definitely start by checking out the other threads on here about that.
As for correcting Arizona, try to avoid a fight by keep both dogs on leash when they are together. This will help you in establishing your bond with the new dog, as well as give him time to adjust to your household safely. This also gives Arizona (held by someone else, or tied to something/crated if that's not possible) a chance to hang back and watch the new dog. He needs time to learn to read the new dog's body language and realize that he is different.
On the other hand, I could be completely wrong and the two dogs could be just sorting things out, or really fighting for dominance. However, I think it's too soon to say, especially not being able to witness this firsthand.
Maybe someone with a blind dog can add?