Scott,
That appears to be a high resistance connection and not an arcing fault of any type. The AFCI device will trip for this type of fault only after the fault has progressed to a line to neutral, line to ground, or neutral to ground fault. It may or may not progress to a point where the AFCI will trip before the building is on fire. Will the AFCI have a better chance at detecting this fault before a fire starts than would a standard OCPD? Yes, it would.
Don
