Passwords and cookies in clear HTTP are no good. Anyone here (should) knows it. Firesheep proves it. GMail and Zuckerberg suffered it.
Just buy or get a free SSL certificate, and let nginx or stunnel handles SSL and proxies HTTP to/from Arc. Total cost, being pessimistic: 150$ for the certificate verification, and 2 hours to set-up the certs & nginx.
I know, it's awesome, it's a custom Arc webserver and all, and good practices are for PHBs only, but still. For a "hacker" website, news.ycombinator.com is a shame regarding to privacy/security (see also: passwords stored as shasums (without even a salt), funny things like <img src="http://news.ycombinator.com/logout>, outdated versions of software used [http://news.ycombinator.com/item?id=516122], etc.)