I think of this formula as a pretty result that is derived by algebraic manipulations, starting from more primitive and more basic formulas, using relations between determinants and geometry.
As a first step, let's massage the formula a little bit. By doing two row operations, namely subtracting the first row from rows $2$ and $3$, the formula is converted into
$$\frac{1}{2} \begin{vmatrix}x_0&y_0&1\\(x_1-x_0)&(y_1-y_0)&0\\(x_2-x_0)&(y_2-y_0)&0\end{vmatrix} = \frac{1}{2} \begin{vmatrix}(x_1-x_0)&(y_1-y_0)\\(x_2-x_0)&(y_2-y_0)\end{vmatrix}
$$
Incidently, regarding your third bullet point, perhaps you can see from these algebraic manipulations so far how the final column of $1$'s was used.
Let
- $P_i = (x_i,y_i)$ for $i=0,1,2$,
- $Q_i = (a_i,b_i) = (x_i-y_0,y_i-y_0) = P_i - P_0$ for $i=1,2$,
- $O = (0,0,0)=P_0 - P_0$.
In the equation above, the left hand side is the formula for the points $P_0,P_1,P_2$ and the right hand side is the formula for $O,Q_1,Q_2$. So we have proved that those two formulas are equal.
Also, the translation of the plane that moves $P_0$ to $O$ is a rigid motion taking the $P_0,P_1,P_2$ triangle to the $O,Q_1,Q_2$ triangle. Since rigid motions preserve area, we have proved that those two triangles have equal area.
Therefore, we have reduced the problem to the following: given a triangle with one vertex at $O$ and two other vertices at $Q_1 = (a_1,b_1)$ and $Q_2=(a_2,b_2)$, its area is given by the formula
$$\frac{1}{2} \begin{vmatrix} a_1 & b_1 \\ a_1 & b_2 \end{vmatrix}
$$
Now we can reduce this one further step, namely to a parallelogram problem: if you rotate this triangle $180^\circ$ around the midpoint of the $Q_1,Q_2$ edge you get another triangle which, when taken together with the original triangle, is a parallelogram. We say that this parallelogram is spanned by the line segments $\overline{O Q_1}$ and $\overline{O Q_2}$. The two triangles whose union forms this parallelogram have the same area, because rotation is a rigid motion. Also, the two triangles have no overlap of their areas. The parallelogram therefore has area exactly two times the area of the $O Q_1 Q_2$ triangle.
So now the problem is reduced one further step: prove that the area of the parallelogram spanned by $\overline{O Q_1}$ and $\overline{O Q_2}$ is
$$\begin{vmatrix} a_1 & b_1 \\ a_2 & b_2 \end{vmatrix}
$$
This is the "more basic formula" that I mentioned in my opening sentence.
But this formula still has to be proved, and here again one can derive it from a still more basic formula by making use of determinants and geometry.
Let's do another rigid motion of the plane, this time a rotation around the origin which rotates the ray through $(a_1,b_1)$ to the positive $x$-axis. Under this rotation, the point $(a_1,b_1)$ goes to some point $S_1 = (c_1,0)$ on the positive $x$-axis, and the point $(a_2,b_2)$ goes to some point $S_2 = (d_1,d_2)$. This rotation takes the parallelogram spanned by $\overline{O Q_1}$ and $\overline{O Q_2}$ to the parallelogram spanned by $\overline{O S_1}$ and $\overline{O S_2}$, and so the areas of these two parallelograms are equal.
Also, the formulas for those two parallelograms are equal, which can be seen as follows. Letting $\theta$ be the angle between the two rays mentioned above, this rotation is represented by the matrix $R = \begin{pmatrix} \cos\theta & \sin \theta \\ -\sin \theta & \cos\theta \end{pmatrix}$. It then follows that
$$\begin{pmatrix} c_1 & 0 \\ d_1 & d_2 \end{pmatrix} = \begin{pmatrix} a_1 & b_1 \\ a_2 & b_2 \end{pmatrix} \begin{pmatrix} \cos\theta & \sin \theta \\ - \sin \theta & \cos\theta \end{pmatrix}
$$
We know that the product of determinants equals the determinant of the product, and we also know that the determinant of that cosine--sine matrix is equal to $\cos^2\theta+\sin^2\theta=1$. Therefore,
$$\begin{vmatrix} c_1 & 0 \\ d_1 & d_2 \end{vmatrix} = \begin{vmatrix} a_1 & b_1 \\ a_2 & b_2 \end{vmatrix}
$$
Regarding the parallelogram spanned by $\overline{O S_1}$ and $\overline{O S_2}$, the formula says this area should be equal to
$$\begin{vmatrix} c_1 & 0 \\ d_1 & d_2 \end{vmatrix} = c_1 d_2
$$
This is the "still more basic formula" mentioned earlier: it's just the "base times height" formula for the area of a paralellogram, from elementary geometry. This completes the proof.