Find some rare earth magnets, as little as $3 for per set of 2 at Radio Shack Google Rare Earth Magnets for other sources. Wargaming figures sometimes come with these and they may be available at a wargaming store. These are super strong. Delete the rubber band completely. Make a plastic plugs for the shoulder joints, 1 for each arm and 1 each for each side of the chest assembly. Super glue a magnet to each pug on the interior side, making sure you have the right polarity. Assemble the arms and chest with the plugs in place, Voila! totally movable and removable arms.
Just a quick follow-up, as I’ve finally completed my model of C-3PO. I went with the Aleene’s tacky glue for attaching the chest piece to the body so as to make it semi-permanent / removable. I applied a very thin bead along the contact points, and clamped until dry. This resulted in the part being attached quite securely, but also allowed it to be carefully pried off with some careful effort, without damaging any of the surrounding paint or styrene. The residual dried traces of the Aleene’s then just easily peeled off, leaving a clean surface on which for it to be re-applied and the part re-attached. Great, as now I will be able to easily replace that rubber band whenever it inevitably breaks.
I’m actually quite impressed with how positionable the finished model is, the arms, legs, head and torso are all able to be moved to give a good variety of poses.
Thanks again to all who replied with suggestions.
Cheers,
Kizzy