> From an end-user POV, what will using an Arc app entail?

If Arc is installed, you're good to go. Everything just works. If Arc isn't installed

  1) arc.js transparently falls back to the cloud and runs the Arc app on a
     server. The user doesn't know the difference.

and/or

  2) Upsell the user to install Arc.

I haven't built the transparent cloud fallback yet.

> What is to prevent other websites from being malicious and connecting to your > locally-installed Peggo VM and trashing it or otherwise exploiting it?

The web server running in the Arc app can check the Referer header to verify the request came from a permissible domain.