Where specifically on the arm/hand should rapid picking speed come from?
It depends completely on the technique that you are trying to gain speed on.
- If you want fast, palm muted power chords (like metal guitar), then it's in the wrist.
- If you want fast open chords (like Pinball Wizard), then it's more in your wrist / forearm (I guess you might consider forearm to be bicep).
- Fast single notes (like Dick Dale), is either wrist or a twisting of your forearm.
- Fast picking for lead lines could be a million different things, including alternate picking, finger technique, sweep picking, etc.
The one thing that took me a long time to realize is that at the end of the day, you'll be faster if you are relaxed. It may not feel like that to begin with, but tensing up never really helps.
Just like my other favorite past-time: It's all in the wrist. With that being said, Al DiMeola has forearms like a ham, but if you watch him play it's amazing the economy of movement that's concentrated in his wrists. Steve Morse, at his peak in the late 70's seemed to use his entire arm, which always looked like it shouldn't produce the insanely accurate, musical flurries of notes - especially during his "country" solos's.
Herb Ellis, one of jazz's fastest guitarists, always seemed to get most of his speed/strength out of his thumb and forefinger - which, seems to be the case for a majority of accurate speed players: a wrist movement that eventually becomes such a second nature muscle memory that it winds up being a fluid motion in the thumb and forefinger area.
There are likely as many routes to fast picking as there are pickers... For bluegrass-type fast runs that are mostly done in a pretty strict alternate-picking style, it seems to come from the elbow with the wrist relatively rigid. Doc Watson refers to "picking from the elbow" when digging in on such passages.
Note that I'm talking about steel-string acoustics here, and usually set up with rather stout medium-gauge strings.
Playing an electric with "slinkies" can be quite different.