So I am guessing idea for me is - Production SAN in Site B, Backup Repository in Site B (Using 12x4 server) which stores a small amount of recent backups (7-14 days retention etc.).
Sounds good. If you can connect any Windows physical server to your production SAN via iSCSI/FC then you'll able to utilize direct SAN approach
allowing to perform backups really fast.
Could I just use the Production SAN in Site B for this purpose
Doesn't sound that good. Why would you want to do that? It will cause a high load to your storage and might result in an overall slowdown of business processes.
Please check this
Is there any calculator to estimate storage space required for backup repository?
I then use Backup Copy function to push this data for longer term storage onto SAN in Site C?
From where do I then use Remote Replica from Backup option?
That depends. If you copy backups every time a new backup appears then it would be better to use backup copies - the same restore points but much closer than your original backups. In case you are going to copy your backups less often that they are created then I'd recommend to replicate form original backups in order to have the most recent replica state.