Pretty interesting topic and discussion.
Took a look at the geologic maps for your area and it appears that deposits in the low areas are descibed as lakebed clays from the last glaciation. The clays apparently form the impermable barrier. Rain falling on the more permeable upland region creates recharge and the head from this recharge drives flow beneath the clay which becomes overpressured. Wells drilled through the clay in the low areas are artesian because of the connection to the high heads in the upland area (its really just a simple siphon). In this area the glacial deposits are between 100-200 feet thick, so bedrock issues should not be a factor.
Interference effects from wells may occur but it depends on the capacity of the aquifer (Transmissivity). If the aquifer is extremely productive, you might not be able to measure any cumulative effect from small even relatively closely spaced wells. As Theo and Ewest point out, at least theoretically, each withdrawal will lower the head, its just a matter if the response is observable. The withdrawals also increase the groundwater flow velocity. It appears that this is a pretty large scale regional condition, so as pebaugh points out, it may only be a pinprick. I'm sure that there is probably some fair hydrogeological information regarding the capacity of the aquifer and DEQ probably has it.
I would be a little concerned about the sand in the well. This could be a sign that the well was poorly constructed when it was installed (screen size too coarse, filter pack incorrectly installed) or it could be that the screen has deteriorated. It may just be accumulation of sand over a long period of time. You could get a sand bailer and see if you can bail sand out of the screen. If the screen is partially filled with sand, this will produce more yield once it is cleaned out and in the best case scenario solve your problems. Considering the age of the well you might have several feet of sand in the screen. If it fills back in, you know there is a problem with the screen. We will occasionally use a special video camera to inspect well screens to trouble shoot. That's probably the best advice I could give you.
Here is a link to purchase the bailer. Don't substitute a plastic bailer, it won't work. Use a good rope and knot. I've occasionally lost bailers down wells then you have to get the snagging hooks out to retrieve them. When you get the bailer to the bottom you will need to surge the bailer up and down a number of times then pull it up and dump out the sand. Repeat until the sand is gone.
Link to bailer
