It makes no difference whether an arb trader connects the markets in a single order or whether he recycles the same steem over and over. I hope this isn't your point of contention. Any selling he's doing in one place, he is buying the same amount somewhere else. The net sell or buy pressure from an arb trader is zero. If he's selling 10k Steem on Bittrex, hes buying 10k steem on Poloniex.

For any order that is being arb'd , it would be the same result if the owner of the original order had simply placed his order on these various markets himself, where the arbiter ultimately does. In fact, he would get a better price but the result is precisely the same as if the arbiter never existed. The only difference is that the Arbiter is doing this action for him and is taking the profit that would have been the savings of the original order had he done it himself.

There are many examples on bittrex and polinex of massive buy volume drivbing the price up, only to be immediately offset by equally massive arbitrage sell pressure setting it back down.

That is normal and is exactly what should be happening. If the massive orders on an exchange are not enough to also fill the orders on these other exchanges then the price will not move up. The individual buying with massive volume on one exchange would be better off splitting his buy order on to all the different exchanges to get the best prices. If he is lazy, unable, or unwilling to do this. The arbiter will do it for him and profits the difference. But again, the result is the same. The arbiter has zero net affect on the price.