I don't think three years is excessive. It might seem a long time since Wikipedia is a relatively young project, but the experience which arbitrators will build up during that three year period will be invaluable in assisting them in making good decisions.
If there is a danger that people will feel "Wikipedia is somehow run by a cabal" then I believe the solution to that is to enlarge the size of the arbitration committee, not to reduce the length of time arbitrators can serve.
Having elections more regularly could negatively affect the way arbitrators work, since they would be more concerned about getting re-elected than doing the job for which they were elected. The election process should not be allowed to interfere with the workings of the committee, and I believe that making arbitrators go through this so regularly could be damaging.
Angela (just my view, not necessarily that of the Foundation)