Sword arm? I don't get it.

...Hmm, can she? Maybe I missed that from SoPM.

It's entirely possible she has no such ability. It could just be the artist employing Rule of Funny to exaggerate the effects of turning a sword into a copy of one's body by transferring one's soul into it.

That's a parody of the power of "Mr. 1" of one piece, isn't it?

I believe it may be a reference to the theory of her body being her real sword and her sword being her real body, the method of immortality achieved by a Shikaisen. I recall someone mentioning it before.

http://en.touhouwiki.net/wiki/Shikaisen said:
it is required that a person "fake" their own death by substituting a bewitched object like a bamboo pole, sword, talisman or a shoe for their corpse

I don't know why but I'm just imagining the narrator from Jojo explaining this just as he did with the abilities of the Pillar Men (pretty funny actually).