Matsuki vs. Hu
I don't think there is a specific answer to their relationship in the book that you'd be in violation of if you chose. Speaking for myself, I see it as a somewhat complex blend of "they disagree what's best for Willowshore and think each other is wrong-headed on some level, but also at the end of the day they care about the town more than their dislike for each other." Like, they feel strongly enough that they'll fight a duel to see who gets to lead (assuming no PC intervention) but they're not trying to cut each other down so much as their visions are incompatible.
I think there's a note in the book when you meet them that they'll agree on the main objectives (get the invaders out of town) but they each have their own primary objective what they think is the most important way to do that--the tradition/superstition of relighting the lantern, or by storming downtown and retaking it.
Speaking for the rest of the town, the "Teeth-Clenched Teamwork" makes me feel that the average feeling in town is that no matter what happens, at the end of the day, they're one town. I feel like there's realistically a whole spectrum of feelings from the most cantankerous "those Northridge folks really think they're so hot, I hate them" to a more moderate "Everyone knows Southbankers are a little backward" to "I don't functionally care one way or the other" all of which are subsumed by an overarching feeling that any outside threat faces a unified Willowshore and they can get back to bickering once that threat is done.
I ran out of time this evening, but I think you have indeed hit on something of a minor flaw with how Hu and Matsuki (and to an extent, Southbank and Northridge) are presented. Maybe it's just the cynicism of the modern day, but "the town will have better opportunities to grow and better economic potential" rings kind of hollow, especially when the chief proponent of this is (in somewhat unflattering terms) a corrupt ex-cop.
If I were to flesh out what makes Northridge special, I would take cue from the Northridge background - if Willowshore were to grow, that would mean things like a school and better opportunities for learning. It might even be appropriate to establish that, during its height as a tourist hub for the monastery, Willowshore used to be more prosperous and possibly used to have amenities it has since lost and could reclaim if it were to grow again.
Jorogumo
Speaking to your questions directly, it's fair to say I think a lot of players might react strongly to the jorogumo. For myself, I plan to stress that a distant human empire exploiting you for your lumber and a slightly less distant spiderhuman empire exploiting you for your lumber doesn't make much difference to a person who has never seen a jorogumo before. They're murderous monsters, but the lumber lords who left town last year didn't care all that much more about the well-being of the townsfolk than a monster would... and perhaps most importantly, if bowing to the jorogumo means even 10% of the town is sacrificed to the monsters, that's a 90% success rate over fighting them and losing.
Sure, the Northridge folks are probably wrong about how they can benefit from such an arrangement, but I don't see them as throwing in their lot, much less selling out the town. They're simply open to the possibility that it might not turn out so bad... which is probably quite relevant if Ren Mei Li is going to work out
Sympathetic Leaders
In writing the two leaders as complex and flawed people, I think it may be true that those flaws can end up taking centre stage in some people's minds, which can overshadow the merits they're supposed to have and sour people against them.
Personally, I don't think they were written to be unsympathetic and shady, but complex, so I do think you should probably attempt to make them seem more respectable if you fear your players will write them off (players are somewhat notorious for taking a disliking to any NPC who doesn't do what they want, but you know your table best).
Matsuki may be an old drunk, but he's also a wealth of knowledge about everything that's happened in town who can answer questions and has the raw expertise of a man who has grown up with the town he loves.
Meanwhile Hu's experience as a military leader re: the guard means she has expertise needed to defend the town. Also she's clearly not afraid to put her own desires aside--even though her own family are still missing in town, she still makes it her duty to manage the safety of those around her, asking the PCs to look out for them as a personal request.
Admittedly Granny does seem to have quite a few things stacked against her for flaws, and the things that are most likely supposed to be her saving graces (authority, ex-guard cred) only work against my impression more. Even so, I think an ideal sort of resolution is to convince both leaders to work together, so ideally I'd be interested in presenting them both as respectable options who are flawed as people, rather than it seeming like a choice between two mediocre options.
I think their relationships with the other townsfolk also helps flesh out their opinions and alignments with the two rival leaders.
Hai-er Ha - Trained by Hu herself, so similar in mentality except for being more guilt ridden.
Ho Jeong-hui - Physically fit but not as wise. Perhaps could be swayed towards Southbank through companionship
Kum Soon-chong - Cares for the livestock and his son. Leans Southbank, but could be swayed either way depending on the PCs attitude towards the first two.
Kawaka - Sides with South duebank to greater desire of logistics and resource management. Someone with an analytic mind could sway him while someone more whimsical may dissuade him. Is especially wary of actions that may attract the Jorogumo.
Yong Wu-Xiu - You can say that the kitsune's late father had a strong bond with Matsuki which influences her allegiance even if she is sympathetic towards Northridge.
Zheng Peng - Granny Hu's right-hand man on defense. Likely one of her biggest supporters as guard captain.
Mother Otis - Otis' loyalty lies in Matsuki's assurances in further loosening restrictions to the inn. Whoever's side is willing to restore the brothel will win her loyalty for good.
Luo Xi Yang - Unaffiliated, although suspected of spending time with Otis in exchange for favors (like keeping the inn open). She is not corrupt, but would rather not have the tryst out in the open.
Sumika - Well versed in food storage, hunting and gathering, hence his allegiance with Southbank. An open mind in that task may sway him otherwise.
Nadoya - Will be the first to say that defense is ill-suited without the tools to preserve supplies, especially though the winter. Likely Matsuki's biggest supporter.
Mama Bao - Leans Northridge due to concern for security of the area. Otherwise, she gets along with the vast majority of the village due to her hospitality.
Kim Gu-won - Often has the most concise arguments in favor of Northridge, even though he often finds it hard to believe them himself. Follows Granny Hu out of both fear and admiration. Someone who can convince him to seek joy as well as abundance may sway Kim the other way.
De-ge - Doggedly tries his best to keep the peace on both sides, both to get on their good sides and to keep gossip open to hear.
Luda Bama - Also neutral... but only because neither side wants to associate with a smuggler. Also because it's a poorly kept secret that both sides depend on him for trade, even more so due to current events.
Dami, Elizbeth, Kazuma and Igawa - Associated with Qi Zhong, Pharasma, Shelyn and Nalinivati respectively, so you can work your way through that.
Ba-Ming Ouh - Distrustful of guards because her parents were killed by a corrupt one. Leans Southbank as a result.