Edit 15 minutes later: I've made the flag to disable rlwrap '-n' like in the master branch.
(I didn't pick the original flag, so I'm not attached to that name. I can change it if you want, I just want both branches to be consistent. I also renamed the script to 'arc' like in the master branch, just to make my life easier. I'll update the instructions at https://arclanguage.github.io next.)
Now it works both from the command line and from emacs.
It's ok for me that the the flag is -n.
I think that the arc script was named "arc.sh" because the folder which is used by the news server is "arc", and it would conflict. We can either take back the "arc.sh" name or change the news server's directory to something else, perhaps "www" like in the master branch.
Edit: We should also change the flag of the default program name in inferior-arc.el (line 95):