I don't see how he looks evil. When I look at Arvak, I just see a lost soul. When dealing with the undead, my standards for aesthetic appearance drops. If anything, I think he is like Durnehvir and likes the time he spends with me in Tamriel being able to see the world again. His owner keeps calling him a loyal and good horse, and I'll take his word for that.
I agree with you, I think he LOOKS EVIL, not evil himself.