One point everybody else is missing: since arc explicitly makes no claims of backwards compatibility, the notion of a spec is meaningless.
If the goal of a language is to be readable there's nothing wrong in the implementation being the spec. Consider it a form of self-hosting, or of eating your own dogfood.
An implementation in a reasonably high-level declarative language is a more reasonable 'spec' than one in C. More features are amenable to checking just by reading rather than by execution.
When something is obviously a bug it doesn't matter if it's a bug in the spec or the implementation.
Those two categories -- obvious bugs, and questions about what is or is not in the language that should be answered by reading the code rather than executing it -- seem to cover all the objections people have raised.
At least I'm talking about the attitude of spec-by-source in general, not particularly about Arc, FYI.
Edit: I agree that more abstract, declarative language is closer to spec-by-source. If somebody says Prelude.hs is the spec of Haskell's standard library I agree. But the core language semantics is still not in Haskell itself, is it? (I'm still learning. Correct me if I'm wrong.)