Here's a raid log of an Arms Warr totally destroying on Fathomlord, if you can get realmplayers to work....
http://realmplayers.com/RaidStats/Fi...=95853&Fight=3
Blood Frenzy is the main reason to take an Arms Warrior, but that doesn't mean Arms Warriors can't outperform Fury on AoE fights. The SS number crunching proves that Arms is going to outDPS Fury by a fair margin while SS is up, I've not seen you bring any math to the contrary. I think that this margin is bigger than the DPS increase Fury gets over Arms while SS is down.
I've had the best results on AoE fights as 2H Fury. Being able to WW+SS twice every SS is creamy and I think you'll agree 2H Fury is the king of Warrior AoE. My second highest personal DPS on AoE fights was as DW Fury, but actually swapping my Black Planar Edges for Mooncleaver each time I would SS (yeah I ran Axes... only BS Weapon spec that crafts weapons you can use in Arms and DW Fury), and swapping back afterwards. I think that's actually the best way to treat AoE fights as DW Fury. In my experience the DPS gained from swapping weapons pre SS is a lot higher than the DPS lost from the 2 GCDs from swapping them back after SS.
As for the perfect scenario with infinite rage etc... that's part of playing Arms. You have to learn to play around the bursty rage generation, and you need to learn how much rage your combos are going to take, so that you can properly save rage beforehand. Any Arms player worth his salt is going to make sure he has a full rage bar before popping SS, and there's very little luck involved there. Properly planning and monitoring your rage beforehand is the key.