I agree that there's nothing necessarily dishonourable about arbitrage, and I agree that based on his story, this man is doing honourable work.
However, I think that there is a potential problem in some arbitrage. Arbitrage depends on information asymmetry, and I think that labouring to perpetuate information asymmetry is unethical. (I would say that failing to eliminate the asymmetry when you could easily do so is a grey area.) So if you are an arbitrageur in an area where the market is trying to eliminate your advantage, you have a moral hazard.
This perspective was driven by utilitarian ethics, of course.
This example, at least, does not depend on asymmetry of information. It depends on the willingness of the parties to invest extra labor.
The business model of the thrift store requires treating the books as commodities ("all hardcovers $2/ea", etc.), as they don't have the volume to invest time in research. The business model of the used book seller requires knowledge, amortizing the cost of researching each book over a global (or at least national) customer base.
Adam Smith would find this a wonderful example of division of labor.
However, I think that there is a potential problem in some arbitrage. Arbitrage depends on information asymmetry, and I think that labouring to perpetuate information asymmetry is unethical. (I would say that failing to eliminate the asymmetry when you could easily do so is a grey area.) So if you are an arbitrageur in an area where the market is trying to eliminate your advantage, you have a moral hazard.
This perspective was driven by utilitarian ethics, of course.