How to proceed when you have a marinade of beef in spices, tomato, vinegar and onion?

tl;dr there is more than one way to cook food, it sounds like you're used to a specifc pattern, but it's not the only one. I'd personally encourage you to try the recipe as-is before you leap to judgment.

(1) It says sauté, not fry, and that will work fine. You should probably shake off excess marinade, and avoid crowding the pan too much. The water will boil and spatter, but the meat will cook and brown. This will be easier if you use the right amount of liquid, though. I see that you reduced the amount of vinegar. You should probably have stuck to the recipe, or replaced the vinegar with water if you wanted to reduce the vinegar flavor.

(2) Sure, you can use tomato sauce/paste in a marinade if you want. It'll impart a bit of tomato flavor to the meat, maybe. The recipe also isn't 100% clear, but does later say "add the reserved masala water", so I think it's also having you use the marinade as the sauce, and the tomato will certainly be obvious enough there.

(3) Yes, you can also use raw onions in marinades. Same note here about how it appears it also ultimately gets cooked into the dish.

(4) It's hard to answer, because I don't really understand why you think this would ruin the dish. The meat has some raw tomato and onion in a marinade, then it gets cooked. You also put raw tomato and onion into the dish, and then cook them. Everything ends up cooked. Not fried, but frying is not the only way to cook food.

(5) I mean, you could do that, and it'd probably be good too, but that's not what this recipe says to do, so it'd be a somewhat different dish. One of the main characteristics of this recipe is that it produces a smooth sauce, with all the flavors blended together: all the spices, the tomato, the onion, everything. There are no noticeable pieces of onion (or garlic or ginger), but the flavor's in it.

(and as for marinades tenderizing things - that's not always the point, not all meat really needs it, but tenderizing also doesn't really mean the meat will be incredibly soft while still raw, just that it'll be more tender and easy to bite/chew)

A couple things to keep in mind -

Using less vinegar in the marinade: is the purpose of the marinade to infuse the beef with flavor and tenderize it? Or is it mainly (or additionally) to apply a coating/paste/sauce to the surface of the beef, that is expected to stay on the meat, to a certain extent? Keep in mind a "tenderized" meat isn't going to semi-dissolve in the marinade when raw as much as the protein structures are going to react a bit differently when cooked. You probably aren't going to be able to tell by touch. A more "liquid" marinade might be more effective in penetrating beyond the surface of the beef and interacting with the meat on the interior. It might be better, not worse, to have a more "liquid" marinade.

"How is the beef going to get fried" - the frying immerses the beef in a very hot substance, and the heat, while reacting more to the surface of the meat, texture-wise, will eventually transfer to the interior of the meat. Let's put it this way - if you didn't use any marinade, at all, how could any meat cook via frying unless it was ground beef disbursed as crumbles? Clearly, the frying process doesn't have to actually touch all parts of the beef to cook it. Similarly, if there is a coating, depending on how well that coating adhere's to the meat, the meat beneath it will still cook, just from all the heat being applied.

Blending the onions obviously infuses the marinade with more of the flavor. It seems like other recipes want minimal onion flavor infused into the marinade, but instead want to use onion as part of the dish, with the onion getting marinade flavor infused into it. Not that I have anything against more onion flavor in marinades, but that doesn't seem to be what they were shooting for with this dish. However, having said that, if don't like pieces of onion and prefer the marinade with more of an onion flavor, then you've stumbled onto a recipe variation that better suits what you like. No rule against that.

Again, I think the tomatoes being added later is more an artifact of the recipe being a mixed meat and vegetable dish, and the desire to have tomatoes, in that form. I think there are probably dishes that use tomato as part of a marinade, and there's no reason not to if you want your meat infused with that flavor, but, again, that is quite different than meat that is infused without it and accompanied by tomatoes. Tomatoes work fine as a marinade component when you want that tomato flavor, though, as Jefromi mentions, often tomato paste is used if that flavor is desired, instead, since fresh or canned tomatoes have so much water content, which dilutes that tomato "flavor."

Sometimes you see variations on dishes that are not traditional or classic takes on dishes, but, rather, what the person posting likes, themselves. As far as "ruining" the dish, if you are after a more classic take, and this is a modified version (think of all the "Americanized" Chinese and Mexican dishes there are out there - perfectly fine..... unless you are craving the original, classical, authentically ethnic style), then it's going to seem "ruined" to you. If you like this take, and it's quite different from the classical style, then it's different, not ruined, because the ultimate measure of "ruined" or not is how it tastes, to you.

Certainly, if you have something in mind, use that to assess, more than the title, whether you want to try that recipe, or create some hybrid of that recipe and another.

When my town rapidly ran out of Chinese eateries that made kung pao exactly as I like it, I had to search. If a recipe had an abundance of hoisin sauce, instead of a little, and did not have Chinese black vinegar in the cooking sauce, I knew that was not what I wanted, so I skipped trying those, regardless of descriptions or relative fame of the sources. Because I knew that was key to whether I liked a version or not.