I know that electric arcs are dangerous [etc] However, I am a bit confused why.
An arc creates the fourth state of matter: a plasma. Plasma in air is very hot; it can be over 2500°C in fact. For this reason alone, it is a major fire hazard as almost nothing can survive those temperatures. Even a small arc (such as inside a loose connector) over time, will eat away material and cause malfunction or fire. A non-intended arc will never "get better" and can only worsen the connection.
A conductor such as a wire, as opposed to an arc, is much more conductive, so has much lower loss. It is difficult to get most conductors in air to melt, let alone double that temperature. Once overloading a conductor causes it to get hot, it will melt and break, leading to an arc. The arc has entirely different physical properties from a hot wire.
[the] specific heat of plasma air, is it low enough to get extremely hot under normal current flow, which then quickly heats up the surroundings?
Yes and no, it is a combination of factors. A small arc, with small current, will dissipate a small amount of power, creating a (very) small heat source. While a big arc, with high current, dissipates much more power, creating a much hotter arc. It is easier for the big arc to melt metal, so would seem more dangerous - but the small arc temperature is still very hot; it is just so small that it can't do as much damage as quickly. So yes, the air does get very hot, but air isn't a very good thermal conductor, so the heat is localized to the area inside the arc channel. Transfer mostly occurs at the electrical contact points. For small arcs, not enough heat is transferred to melt the metal (it gets thermally conducted away faster than it can build up.) To produce "big" arcs and melt metal, high voltage is required, which adds another facet of danger.
Current does play a role in the temperature of arcs. While unpleasant, it is possible to touch a small 2MV Tesla coil without so much as (major) discomfort. There, the current is very low and frequency very high, so the current tends to travel over the skin rather than penetrate into it.
The lower the (oscillating AC) frequency, the more dangerous, with DC being the most dangerous to living things. DC arcs are also harder to extinguish and require more exotic methods than AC, since AC naturally reverses current twice every cycle, tending to help extinguish arcs.
Power substation arcs are especially bad, as they employ low frequency (60Hz), high-voltage, and high-current. Near the end, you can see molten metal (>900°C at least) dripping down from whatever the arc touched.
Sometimes the arc is able to extinguish itself through contaminating the conductors from vaporized materials or removing enough material to create a distance large enough to quench the arc. Sometimes it is not, and results in an oil-filled transformer venting in a fireball. But in all cases, (unintended) arcs are damaging and undesired.