Hi!
I haven’t read most of this thread but I will say I have a good friend who had her Arabs do dressage. Her first guy was a stallion his whole life but is someone who if was human, would be wearing a smoking jacket, smoking cigars and drinking good scotch. I rode him occasionally and he was such a gentleman. Lots of Polish Arab in there.
She bred him to a Proof mare (Proof was a phenomenally-moving Arabian racer and we visited him together) and produced a really quality Arabian male. She sent him to Hilda Gurney (needs no introduction here) in CA and she trained and showed him through 3rd or 4th level successfully. Beau is back with his owner with a local trainer that has him at FEI.
For sure, arabians - the right Arabians - can do the job. My current trainer has a half Arabian/half warmblood in training and they are solid PSG successfully schooling GP. Note that the Trakehner studbook, a German Warmblood studbook, only accepts Trakheners, TBs and Arabians. My last horse was a trak and she was an amazing horse. She was quite successful through 4th and had a natural passage and other collected work.