Your confusion comes from the fact that you are IMPLICITLY reasoning using the concept "absolute simultaneity", that is: "if two events in different points of the space are simultaneous for one inertial observer then they are simultaneous to all inertial observers".
One of the most important features of Special Relativity is precisely that there is NO "absolute simultaneity".
Suppose observers A and B are at rest in the origin and simultaneously (for a third observer also at rest in the origin) they move in two opposite direction with the same acceleration until they reach the velocity close to c and then, simultaneously (for a third observer, at rest in the origin), they stop accelerating.
After they stopped accelerating, observer A reads his/her own clock (Event 1) and simultaneously (for A) A reads B's clock (Event 2). We might have, FOR INSTANCE:
(Event 1) A's clock: 10 hours at A position
(Event 2) B's clock: 5 hours at B position
Observer A is sure both readings were simultaneous! However, observer B DISAGREES. Observer B saw observer A accessing B's clock when B's clock was 5 hours, however, as seen by B, "observer A reading A's clock" was not simultaneous (for B) with "observer A reading B's clock". In fact, observer B sees
(Event 1) A's clock: 10 hours at A position
(Event 3) B's clock: 20 hours at B position
as simultaneous events. Of course, it is NOT what is seen by A.
Important: It is somehow similar to what happens in every day life spatial perspective. Suppose you and I are standing in a plain. We are quite away from each other. Using a rule I measure you and, for me, you are only 2 inches tall. I measure myself and find I am 70 inches (or similar) tall. You have a rule exactly like mine, and you measure me, and for you I am only 2 inches tall, and you measure yourself and find you are 70 inches (or similar) tall.
Remark: You wrote: "each observer claims the other observer's clock works more slowly which obviously cannot be true. It is like to have two numbers each smaller than the other, it is not possible". As you may realize now, it is NOT like "to have two numbers each smaller than the other", because the observer who sees " $a<b$ " is not the same observer who sees " $b<a$ ".
Second Part of the question: After some time the third observer, let us call observer C, in the origin send two flashes of light in opposite direction toward A and B. When they receive the light, A and B record what their clock shows and send the result to the origin.
According to C, the flash sent to A got to A at exactly the same time the flash sent to B got to B, but this simultaneity is seen by observer C only.
Event 4: flash 1 got to A
Event 5; flash 2 got to B
For observer C those events are simultaneous. However, A saw flash 2 getting to B AFTER Flash 1 had got to A. Observer A could measure, FOR INSTANCE:
Event 4: flash 1 got to A. A's clock shows 10 hours (and B's clocks seen from A shows 5 hours).
Event 5; flash 2 got to B. A's clock shows 20 hours (and B's clocks seen from A shows 10 hours).
Observer A sends the information "10 hours" (the hour from A's clock) back to observer C. And observer B? Observer B saw flash 1 getting to A AFTER Flash 2 had got to B. Observer B could measure, FOR INSTANCE:
Event 4: flash 1 got to A. B's clock shows 20 hours (and A's clocks seen from B shows 10 hours).
Event 5; flash 2 got to B. B's clock shows 10 hours (and A's clocks seen from B shows 5 hours).
Observer B sends the information "10 hours" (the hour from B's clock) back to observer C.
Note that A and B see Event 4 and Event 5 in oposite order in time, while observer C see them as simultaneous.