Enchantments cannot affect an event that occurred before it was revealed. Pg 18.
At the end of any of the eight steps of an attack or three steps of casting a spell Pg 19.
AF if revealed AFTER the roll dice step of an attack cannot effect the dice rolled in that step. This means you have to reveal AF before you roll dice otherwise it will not benefit you.
I think that makes your first part quite clear. Now that means that going into the dice roll we have both AF revealed and Temple of the Dawnbreaker ready to affect the dice roll. This has 4 different outcomes depending on what kind of roll. Initiative doesn't matter.
Mage 1 has AF, Mage 2 has TotD.
Mage 1 attacks, good roll, Mage 2 rerolls, good roll, Mage 1 keeps.
Mage 1 attacks, good roll, Mage 2 rerolls, bad roll, Mage 1 rerolls, keeps.
Mage 1 attacks, bad roll, Mage 1 rerolls, good roll, Mage 2 rerolls, keeps.
Mage 1 attacks, bad roll, Mage 1 rerolls, bad roll, keeps.
To me a reroll is basically an undo. That last roll never happened but now someones ready marker is flipped and they can't undo the new one again but the other player still might be able to. I think this match up is in favor of the player with TotD. It makes the person running Akiros have to roll well twice to keep a good roll while giving them only 1 opportunity to reroll bad rolls.
Now is this fair or intended? I would hope they predicted and tested this interaction before releasing Akiros Favor but it might have been missed and needs to be addressed. I would play like I have written out though and that, I believe, is how Arcane Duels played it out during a tournament when this came up.