Question: Where specifically on the arm/hand should rapid picking speed come from?

Answer: 
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.
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.