The paragraph basically says that Gideon, just an unknown farmer, and the people of Israel managed to defeat the enemy, all because the people of Israel trusted what he said and they trusted him.
Therefore, God can do great things through ordinary people who trust Him is the answer.
'That' is A, a demonstrative pronoun. Because you are referring to that person, you are basically pointing at your cousin, therefore it must be a demonstrative pronoun.
