Please tell me that's at least short course meters (25 meter pool), not long course. If you're swimming a 1500m in 21:15 after 4 months of swimming, you've got more swim talent than the majority of the folks racing. To compete in your age group, your bike and run do need attention. That's a respectable FTP and running pace but those are the 2 areas you'll need to work on to compete for a podium spot in larger events.

1:25/100m...dang.

I've only started swimming ~4 months ago, but I've taken it seriously since I had virtually no swim background before this (5 swims a week of 30-45min, lots of video analysis of pros, etc) and find that my threshold pace is about 1:25 per 100m. However, I noticed that this seems to be a pretty respectable swim speed for most age groupers. I'm focusing on Xterras at the moment, so those are the times I'm looking at with an eye towards 70.3 in the future; I have literally no interest in full IM racing. And the swim seems to be the least important of the three disciplines from an overall time standpoint.

Should I swim less (3-4 times a week) and focus on the other two sports? My run seems to be going well, but I think my bike leg will be my weakest, at least as of this moment. This leads me to believe I should swim less and focus on the bike, but I don't know if more gains in the swim are going to lead to more overall time gain than if I focused more on the bike. Admittedly, my FTP has TANKED since I started triathlon training from a high of 315 watts at my peak last year (148 lbs).

For reference, I'm training 10-12 hours a week with 4-5 swims (1:25 per 100m), 3-4 runs (7:00 10k pace) and 4 bikes (250w FTP) per week (mostly trainer given my work/family schedule). Oh, I'm also 31, if that matters.

No you are not fast enough. Swimming. What do you really call threshold pace as, 1000TT, is that how you arrived at your 1:25 or you swam 60min all out and held that pace. 1000TT does not even remotely establish the threshold pace, though some may call it here that way. Swimming community uses T3000/T30 or similar to establish the threshold estimate. Judging by duration of your swims, they are never long enough to estimate the threshold pace.
As a reminder, in swimming world, 1000/800 or 1650/1500 are all VO2max affairs, above threshold for sure. If tests are used at those distances, they estimate VO2max pace, which is faster than threshold. Urbanchek and crowd have tables to reverse estimate threshold from their rainbow charts.
Have fun. 1:25/100m on few hundreds is ok and will get you to back end of FOP. The question is if you can actually hold something like that in 1500m, that buys you just over 21:00, still not FOP.