I agree with you that using the keyboard arrows to nudge cross hairs during capture would be a "bit odd" when used in conjunction with the mouse. That is if the mouse is still the only way to initiate and finalize the capture. What if a keyboard shortcut could also be used to simulate the left mouse click to start the capture?
The workflow could then be to use the mouse the locate cursor to the approximate starting location, then use the arrow keys to fine tune the starting point, and then use a shortcut key to anchor the actual starting point. You could then use the mouse to locate the approximate end point, use arrow keys to fine tune the location, then use the shortcut key to finalize the capture.
The spacebar would be an ideal shortcut key for starting / ending the capture. Since you are already using the spacebar to allow the starting point to be relocated, using the 'Ctrl' key may work just as well since it's accessible by the left hand while the right hand is on the arrow keys. You could either require the shortcut key to be held down during the process, or press/released for the start and end points.
So we're talking about nudging the location of the cursor right? Not nudging the starting location selected when left mouse was held down?
I'm not sure I understand the difference here between "location of cursor" vs. "starting location". Maybe my explanation of the workflow above helped you better understand what I was thinking. If not, just let me know and I'll try to provide more detail.
Regarding the cross hairs, I'm glad to hear that you are open to using solid lines for the region selections. I think it would help. I just wanted to reaffirm your point, rather than making the line a fixed color, making the lines appear as the inverse of the background color should take care of the 'blending' issue.