Istanbul, I don't think that you should play Rethink. Let's face it, it might be somewhat of a "pure" counter, but it doesn't counter much, and there will be times you wish it was a real counter. Thwart, however, is a real counter. You have a good reason why you have it: it is great against Rising Waters and land destruction decks. Though you can't play its alternative cost much, Thwart's ACC will still come in handy, espeically late game, when you're probably in control; by that time, and most likely, Rethink will be sitting in your hand wishing it was a Thwart. Keep it with Thwart.
As for Teferi's Response: you're making the right decision. Stick with the Sheltering Prayers.
Now, for Dismantling Blow. I think you're right. It's not like there are any Artifacts or Enchantments that are a must-kill. You could wait. Go with it.
Mikeymike, Air Elemental is, in fact, a solid creature; though Istanbul's deck is not focusing on beatdown.