Yes, you can run Arch Linux (“ARM” stands here for an architecture and Arch Linux ARM is an Arch Linux flavor) in chroot as well as you can boot into it natively (through U-Boot).

Personally, it (Arch in chroot) has been useful to me to run up-to-date versions of software packages (SSH) without hassle or even those not found in Maemo (SWI Prolog).

As it runs natively thanks to Skry’s and others’ work, it is possible to build upon this fresh and bleeding-edge distribution and create anything – given that some people (looking in the mirror now) become active :-)

Reconstructing the Maemo system (its GUI) on top of Arch sounds sweet to me – but anything is possible, so you are welcome to join the effort starting with testing the thing out (visit #maemo-alternatives) :-)