The arm is just a large wheel and a small wheel on the same axle, with the unnecessary parts cut away. Round (not-cut-away) wheels will capture more of the energy as rotational inertia, leaving less for the projectile.
Sort of. A light-weight wheel compared to the load etc is negligible. And an arm is definitely not a wheel - the rope doesn't always pull completely tangential to the rotation, not at all. Nowhere near. That's the point.
