There was some reason I didn't do it that way (I'm the author of ArcLite). IIRC, it was because the semantics of Arc forms differed in a way that would basically require an Arc interpreter anyway, even if you compiled them. For example,
(foo "bar" 1 2)
We could add an arc->rainbow-applet translator. It might be too expensive to declare applets inside webpages, so we need a toplevel defapplet-macro and macros for embedding applets into webpages and for the applets to communicate with the server.