Furthermore in 1918 the economy of all of the Arab world was damn close to zero - no oil so all they produced was dates, hummus, etc.
That's like saying that before Silicon Valley, all the United States produced was corn and beef.
Arabia proper was pretty destitute, but Egypt was one of the world's largest growers of cotton and wheat, Syria and Iraq had well developed, diverse agricultural economies and some small-scale industrialization, and Oman was a still fairly significant trade hub, plus the Gulf states with weird little things like Kuwaiti pearls. Saudi Arabia also leaned pretty heavily of income from taxing the hajj.
OTL, we also see Britain happy to lend money to Iraq and Jordan to develop their economies, so there's every reason to assume they'd be happy to do that here too. Syria and Iraq and Egypt all have excellent agricultural land, large populations, terrain that allows construction of good transit infrastructure, and even some natural resources (minerals from the Dead Sea for example - they're not just used in hand creams, but in the 20s the Sea was an important source of potash among other things).
What would it take for the Arab Union to be successful, or for it to incorporate more countries into itself?
The easy answer - no Israel - might help but probably isn't sufficient. OTL, the reason it collapsed was that Egyptians never really saw themselves as being the same people as other Arabs, and Cairo consistently treated Syria as a lesser partner rather than an equal one. Getting bogged down in Yemen didn't help either.
If Cairo could treat Syria as an equal partner, and refrain from, for example, trying to purge their entire political class and reform their economy to be dependent on Egypt's, then the union could last
Growth-wise, even with Israel existing, Syria's eventually going to want to annex Lebanon as OTL, and while Jordan can't be conquered due to British support, an early Palestinian revolution could see East Palestine joining the UAR.
Ultimately, stability relies primarily on Egyptians not being arrogant asses.
Arab nationalism by the time of WW1 was a mostly Christian Arab phenomena,
by and large the majority of the arabs in the ottoman administration and army officers remained loyal till 1919.
...I'm not sure how true that is. The Arab Congress (a pre WWI Arab nationalist meeting possibly inspired by the World Zionist Congress) had some Christians from Lebanon, but the majority of attendees were Muslim (specifically, Sunni). Definitely the Lebanese (and other Christians) were very prominent in the whole thing, but I wouldn't say they were the majority.
Interestingly, one of the parties to attend was the Party for Decentralization, a formal political party calling for decentralization and perhaps eventual federalization of the Ottoman Empire while opposing independence, showing that one can be an Arab nationalist
and a loyal Ottoman subject at the same time! (although admittedly, most of the attendees were pro-Independence)
The Al Sauds defeated the Hashemites because the British switched support and wanted to bring them down to size so they can be better managed.
Without British arms the alsauds would have been crushed between the Hashemites and Al Rashids.
Not even a little bit. As I said in my earlier post, different parts of the British government supported different sides of that conflict, and the Foreign Ministry, who supported the Hashemites, actually wanted the Hashemite state to be as strong as possible to use as a bulwark against Arab nationalism and independence movements, protecting their ports and clients along the Gulf Coast and especially protecting the Red Sea and the all-important Suez Canal. The India Office (ibn Saud's benefactors) might have been trying to play the sides against each other, but probably they were just following their standard procedure of supporting local petty nobles to create stable clients.
And as far as being crushed goes, modern Saudi Arabia is the 3rd Saudi state. Ibn Saud, even without British arms, had a smallish but very loyal army with the absurdly high morale that only holy warriors can muster. He could have pursued a guerrilla war against anyone in the Nejd and kept them off for years. The Hashemis or Rashidis could have defeated him, maybe, and especially with outside support, but he definitely wouldn't have been crushed.
If you're interested in the foundation of the Saudi state, I cannot more strongly recommend "Ibn Saud, the Puritan King of Arabia" by Kenneth Williams. It was published in the early 30s by a British diplomat who had been involved with the entire process, and is one of the few books about the history of modern Saudi Arabia that wasn't written with the Saudi government looking over the author's shoulder[1].
without doing away with the Sunni-Shiite split it would be near impossible
As others have said, this is a more recent development. In the early 20th Century, Sunni-Shia relations were arguably the best they've ever been in the history of Islam, with, for example, Sunnis and Shiites uniting in India to oppose the destruction of the Ottoman caliphate. Several prominent jurists made attempts to reconcile Sunni and Shiites laws and beliefs in the 20s and 30s, too, often in the name of Arab unity.
It has oil which they could let the Germans/British exploit. So money is no issue.
Oil reserves weren't discovered in Arabia until the late 30s
EDIT: I recommended the wrong book about Saudi Arabia in [1]; I was referring actually to "The Birth of Saudi Arabia" by Gary Troeller.
The Williams book is a good companion piece to Troeller, but Williams is a little too in love with ibn Saud; Troeller is more objective about the whole thing. Apologies.