You can use ukeyboard to have a virtual keyboard with arabic, and I'm sure you can add a function to write in arabic with the hardware too, as this was done with Hebrew:
http://talk.maemo.org/showpost.php?p=430315&postcount=5

So I'm only guessing that you could change that to support arabic, maybe I'm wrong.

But I'm wondering if the UI can be translated or is it closed source.

Even if you have arabic you'll have one last issue, is the writing from left to right, when you should be writting on the other direction, it might annoy you when writing SMS and such, maybe you'll get used to it.