The first address I think would be http://www.arabeyes.org/
("the arabic unix project").
Wether or not your system may be entirely in arabic depends on the application itself - it might be internationalized nicely for one language, but maybe not for another.
When it comes to (displaying) manpages, it might get worse, not all Unicode ranges are supported by groff as far as I know.
In principle, _typing_ arabic works rather well - the cursor switches correctly to the left side and all KDE and Gnome and Xfce applications support bidi nicely (the last time I tried and that was 3 years ago, it can only get better
). Firefox 3 for example distinguishes its back and forward button for left to right and right to left languages.
So, in short: Displaying and typing and printing works rather well, but when it comes to messages and translations, it highly depends.
Try setting LANG to your preferred arabic encoding (there are several - egyptian, syrian, yemenite... - "locale -a | grep ar" will tell you.) and compare.