> í Mosfellingabúð.
> in the booth of the Mosfell folk

Yes. "booth" here being the shelter where people stayed while
attending the assembly.

> (couldn't hardly hear yourself think)

The usual trouble with arguments is that you can ONLY hear yourself
think ;-)

> En það var þó ábyrgðarráð er hann var heiðinn.
> But that was a step involving rich (CV) because he (Thorgeir) was a
heathen.

I guess "rich" was a typo? CV has "a step involving risk" [
http://lexicon.ff.cuni.cz/png/oi_cleasbyvigfusson/b0039.png ].

> En ef sundur skipt er lögunum þá mun sundur skipt friðinum og mun
eigi mega við það búa.
> for if the Law is split asunder so will peace be split asunder and
we may not live with it (or not live like that)

Yes: split or divided.