Of course, you can't spot-reduce. But, you can build the muscle underneath which will 1) raise your metabolism and burn more calories so you lose overall faster and 2) give your arms the underlying structure they need to look better when you get to goal.
I have the same problem. Last time I lost all this weight, my upper arms were horrendous. I had so much flab/loose skin there was actually a big fold on the inside about halfway between my elbow and shoulder. I vowed that wasn't going to happen again, and it hasn't.
I started out by lifting freeweights, targeting the triceps. I also used machines. I did as heavy a weight as I could, low reps. (I can do 2 reps at 30 lbs or about 6 reps at 25 lbs.) You can buy a book like Weight-Lifting for Dummies, or just google for info on how to target the triceps. That was step one.
After a couple months of this, I bought another book called The New Rules of Lifting for Women which recommended doing whole-body exercises instead of target toning. The presupposition being, whole-body exercises mimic natural movements of the body and build muscle faster and more-substantially than isolation movements. I think it's right.
I haven't lifted in a few months, but the 4-5 months I lifted, I built a tremendous amount of muscle all over--abs, legs, arms, glutes, etc. My arms are still enormous--that's just how I'm built, it's genetics--but not as flabby as last time. And no big fold of skin, at all.
If I were to have liposuction tomorrow, my arms would look like Linda Hamilton's, or better, under all this fat. Eventually they will, and I'm hopeful the loose skin will be at a minimum for my age and given my former high weight. I won't know til I get there though.
So, I would say, join a gym or invest in the heaviest free-weights you can afford. Don't bother with light weights except to build your endurance up. 10-15 lb free weights are the minimum to do what you want to do. Build your endurance then go for the whole-body lifting. And I think in a relatively short time you will be shocked at how great your arms look.