Fascinatingly this does actually seem to work in the Settings app, but not in Firefox. I wonder what's different?

Interesting. I think the problem is that we are scrolling with 2 'fingers' on the screen and Firefox gesture recognition might not handle that well. 
Scrolling with two fingers increases the compatibility greatly to make sure we really scroll and do not interact with elements. 
This is probably something we would want to bring up with Mozilla to see if they can fix this in their gesture recognition.

Elliott said this was on the trackpad though, not the screen.  Scrolling on the trackpad should generate Android ACTION_SCROLL MotionEvents (https://developer.android.com/reference/android/view/MotionEvent.html#ACTION_SCROLL), right?  Either something is broken in Arc++ with generating those events, or something is broken in Firefox not responding to them (wouldn't be uncommon since many Android apps assume only touch input).  Easiest way to tell which is probably to plug a USB mouse into a real Android device and try wheel scrolling firefox there.  Last time I did this I noticed a couple apps that were broken (but can't find my USB adapter necessary to try it right now).

I wish we could use ACTION_SCROLL, but that is not really being handled by Android Apps, not even by most framework standard views. It also does not support smooth scrolling. 

So Touchpads (And I think mice as well in Android N onwards) will scroll by emulating touch events and putting down two virtual 'finger' on the screen. 

Ugh, is that what Android convertibles do (like the Pixel C) too?  That's ugly, but I can understand why it's necessary for app compat (the inverse of the problem we're so familiar with on the web with sites being designed for mouse events).  Thanks for the details.

Anyway if Firefox behaves the same on Pixel C and Arc++ in this regard, then I'd argue it's not an Arc++ issue.

If the system is emulating touch events and sending the right input events for that then it should just work in Firefox as well, in theory anyway. I tried two-finger scrolling in Firefox on a couple of Android devices and noticed that there is a pre-existing bug where the scrolling doesn't start until you do a "pinch" type of gesture - if the distance between your two fingers remains constant, then the scrolling won't be picked up. If it works for you after doing a pinch and continuing that gesture into a two-finger scroll then it's likely the same issue.

I filed and fixed https://bugzilla.mozilla.org/show_bug.cgi?id=1308627 for the issue I described in comment 8. Not sure if that will help here or not.