I use Petersen's book.
How do we know $\hat{K}$ takes exactly the form in the description? Specifically the condition $|v| \leq |\hat{\dot{c}} |$
Pretty sure there is a minor typo. They want to relabel first $\mu:(-\epsilon, \epsilon) \to M$ with $\mu(0) = q$ and $\dot{\mu}(0) = v$. Now how does $\mu$ patch with the $c(t_j) \in K$? If $b$ is arbitrary large and $\epsilon > 0$ is arbitrary small, there should be a gap right?
- So the contradiction is that $[0,b)$ is maximal? Can someone spill out the details for me?


The choice $\lvert v\rvert\leq \lvert\dot c\rvert$ is pretty arbitrary, we only need it to contain what we need for the argument that follows, but I suppose a $\leq$ looks more intuitive (e.g., corresponds to closed ball being the first example of compact sets).
No, I don't see any typo here. It is an abuse of the letter $c$ for curve. :-) Let's change to $\mu$ as you suggested.
You have $\hat K$ and now choose $\varepsilon$ so that for every tangent vector in $\hat K$ the exponential map is defined for time up to $\pm\varepsilon$ (noninclusive). Now we have earlier chosen a sequence $t_j\uparrow b<\infty$. At $t_j$, the geodesic was still defined, so we have $(c(t_j),\dot c(t_j))$, and this pair is in $\hat K$. So for some $0<\delta\leq\varepsilon$, we have two curves: $c(t_j+\tau)$ and $\mu_{c(t_j),\dot c(t_j)}(\tau)$, both defined for $\lvert\tau\rvert<\delta$ and has the same initial data at $\tau=0$. So they have to agree. Hence we may patch them together and extend the curve $c$ to at least time $\max(b,t_j+\varepsilon)>b$ (possibly excluding the end-point), contradicting the choice of $b$.
So we have proved:
which will be used later.
No, the order of choice is
so you can't move $b$ somewhere else now.
Suppose $M$ is complete under metric $d$, and that, contrary to (1), there is a geodesic cannot be extended beyond $(-a,b)$, $b<\infty$, $0<a\leq\infty$. Then we have two conflicting conditions