Yeah this would potentially be a nice solution; I do think it’s fair that if you see someone casting a spell you yourself can cast, you’ll recognize what it is. The one drawback I can see is that it requires me to have everyone’s spell list memorized, which increases the chances I miss one of the matches.
The more I think about the arcana check, the more I’m interested in it; initially I was worried adding additional checks every time somebody casts a spell could slow combat down too much, but maybe I’m overthinking that.
Oh now that’s an interesting house rule. That actually gives me an idea for situations where you upcast counterspell but it still requires a check RAW: adding a bonus for the level of the upcast. So if a 6th level spell is cast, and a 5th level counterspell comes out in response, the counterspell caster can add another +2 to their D20 + spellcasting ability check