All right :-)

We have three main-kinds of vowel-changes
in Old Norse. As Arlie once commented they
sound a bit like the titles of a horror movie
trilogy.

The Breaking
The Mutation
The Ablaut

The Icelandic terms are as follows:

klofning - breaking
hljóðvarp - mutation - umlaut
hljóðskipti - ablaut

- - -

Ablaut is an Indo-European phenomenon not restricted
to Old Norse or even to the Germanic languages.
English examples abound in the conjucation of verbs.

sing - sang - sung
take - took
break - broke

Mutation is more of a Germanic phenomenon. According
to orthodox theory it happened in three stages.

A-umlaut is common to all the Germanic languages, including Gothic.

Proto-Germanic *wiraz > Old Norse verr (Latin 'vir')
Proto-Germanic *hurna > Proto Norse horna

I-umlaut was the next to occur; most likely it simply
had not happened by the time of our recorded Gothic sources.
In any case we can see its effect in all the extant Germanic
languages. Some examples from English:

man - men (ON maðr - menn)
mouse - mice (ON mús - mýss)
foot - feet (ON fótr - foetr)

The last mutation is u-umlaut which happened only in the
North-Germanic branch. Icelandic examples:

land - löndum
barn - börn
sumar - sumur

Around the same time the Old Norse breaking was occurring.
Taking the suggested example.

*ferðuR > fjörðr (syncope, u-breaking)
*ferðu > fjörð (syncope, u-breaking)
*ferðiu > firði (syncope, i-umlaut)
*ferðóR > *ferðaR > fjarðar (a-breaking)

Other examples:

English 'gospel' - ON guðspjall
English 'bell' - ON bjalla
English 'helm' - ON hjalmr > hjálmr
English 'help' - ON hjalp > hjálp

Hope that helps set the framework.

>In Colloquial Icelandic (the book I use),
>the author mentions something she calls
>fractION (e.g. jökul + i = jökli]].

I don't know if we have a specific name for this;
perhaps 'brottfall'. This sound 'change' is a consequence
of The Syncope (stórabrottfall).

>My instinct would be that they are actually quite
>separate phenomena: klofning seems a good description
>only of the second phenomenon just mentioned, as the original E
>"splits" into 2 bits, to wit the J and the Ö/A, and the
>first meaning of KLOFNA in Hólmarsson is given as TO SPLIT.

Exactly.

Kveðja,
Haukur