Keep in mind you're playing 'musical chairs' here. If you do this with money you need and the music stops you might possibly be in deep trouble. Only do this with money that you don't actually need, and only do it if you understand all the risks that come with playing arbitrage over exchanges with flaky connectivity. If your initial trade goes through but your offload does not you have a problem.

If you do have a verified account at both, yes, it should be fairly simple. As of now though it's unlikely that your trades will go through.

Also, the price has started falling on BTC China as well.

Yup, the arbitrage opportunities are real. Just yesterday the Canadian exchange (cavirtex) was trading $40CAD/BTC higher than MtGox (CAD); if you had an account with both, and free money to spare, you could take a handsome profit (minus fees, usually around 3% each, so 6% roundtrip)

In theory, yes.

It happens even in the real world. http://en.wikipedia.org/wiki/Arbitrage

Once the transaction is processed and you have your BTC, then yes. I don't know how fast MtGox releases BTC from the wallets they control though (or similarly, how long it takes BTC China to give you access via their controlled wallets).

As others have stated due to the DDOS your trades will have low likelihood of going through (in fact some people may be doing this as we speak).