Halzephron, thank you so much for your answer. I dont have the high enough reputation to mark your answer, hopefully someone else will.
Details below:
You are absolutely right about being able to use a single IRS to control a number of servos - embarrassing I did not think of that, but given how well your simpler solution worked - I'll just use that.
... Also, you are writing DDRE to enable outputs on port E but toggling a pin on port C.
Thanks, I commented out that line, and it works the same - (so I dont need to enable output at all?)
Bit WGM12 doesn't exist in TCC1A (you've actually set bit 3, which is FOC1A - "force compare", see datasheet.)
I removed that too, but leaving the rest of my code unchanged - it results in servos moving slower, with way less torque and jittering as they do, even after arriving at desired position. Servo makes a weird "shaky" noise (frequency ~10-20, I'd say) and the arm it trembling, so for the reasons I don't understand - setting this bit seems necessary.
I suspected that a timer per motor is highly inelegant, and so I really like your second approach (built - in timer-generated PWM),
... This is also the right solution if you are PWM driving motors directly (e.g. through an H-Bridge.)
Very curious, why? I.e. what's the difference between using this method vs, say, timer-generated PWM.
In your code, I had to change below line to get 50HZ, otherwise I was getting 25HZ before (verified with a scope)
ICR1 = 20000-1; // was 40000 - 1;
One other thing I noticed with scope was that the timer-generated PWM code I have - produces less "rectangular" shape than the PWM code snippet you attached. It takes about 0.5 milliseconds for the signal to drop off to 0 with my code, and its absolutely instantaneous with yours (which is great). This solved another problem I had been bashing my head against: I could get analog servos to work fine with my code (IRS-generated PWM), but any digital servo I tried - just did not move, as if it was broken. I guess the shape of the signal is critical for digital servos, I never read this anywhere. Or maybe its something else I dont know.
As a side note, another weirdness I spent a bunch of time on - I uncommented the TIMSK1 = (1 << TOV1); line, thinking I always needed it - but what happened, my main function would get frozen, blocked forever upon first call to delay_ms(...) not sure what it is - but keeping it commented out unblocks my main loop (where I read the servo positin values from the USB HID using Teensy's sample code)
Again, many thanks for the help.