New method of rooting your Arc (zergRush method) press this link.
Warning: use .184 first or you will brick your device.
There are so many threads calling for 2.3.4 and Root and the information is spread all around the forum. I will therefore give a straight answer here: 2.3.4 can be rooted now.
Flash UK.184-> Generic_World(Nordic).181 ->Root + OTA = Rooted 2.3.4
Here is the link for the .181 firmware: http://www.mediafire.com/?y9s73andrl4bllc
This method with .184 first, always works for me.
I made it safe with the LED/battery problem, so I flashed the UK.184 first before I flashed the one above (.181) and I had no problem with LED/battery!
-Turn off your phone and flash to UK.184 firmware (wipe data).
-Start your phone and agree to the normal stuff (note: no battery problem now).
-Turn off your phone once more.
-Flash Generic_World(Nordic).181 and start your phone again (wipe data).
-Plug in your USB-cable to the computer and phone again (ignore PCC companion set-up).
-Make sure USB-debugging is activated in the settings menu.
-Install Gingerbreak 1.2 and press "Root the phone".
-The phone reboots by itself in about 30 seconds after pressing Root (if not, pull down notification bar and press on mass storage and push mount SD-card - it works everytime)!
-After reboot and a long wait, go to settings and install OTA.
-Phone collects firmware OTA and reboots many times.
-Now Its working and you have rooted 2.3.4 :)
Don't touch anything else during this procedure.
UK.184 firmware is here: http://www.multiupload.com/LEA95XC5J0
Read also this:
Edit 26/9: this is my findings after reading all posts:
After reading all posts I am getting an idea of the problem (but no solution if you already have problem).
(a) Some people had .368/.145 and flashed to .181 with Root and then OTA to 2.3.4 and it worked fine, (but they will probably get LED-problem next time they need to flash down because they obmitted the .184 step).
(b) Some people already had 2.3.4 and flashed to .181 and got LED-problem right away.
(c) Some people had .368/.145 and flashed first to .184 and then .181 with root before OTA to 2.3.4 and they seems to be fine.
(d) Some people (including me), already had 2.3.4 and flashed to .184 before flashing again to .181 with root and OTA to 2.3.4 and there was No LED-problem. (I also tried several times to flash down again without trouble, but always with .184 first).
(e) Some people coming from 2.3.2 can flash .2.3.2 again and root + update OTA to 2.3.4 (But ofcourse, when you want to go down again, be careful).
-So it seems that .181 alone makes the LED-trouble if you want to upgrade your firmware with root to 2.3.4.
-But a combination of .184 and .181 seems to work, when done the first time only!!! It is too late if you did any other way in the beginning.
I therefore don't think it is by chance or random to get LED-trouble, it depends on what you did in the first instance?