Kindle does display Arabic glyphs but doesn't know how to layout r-to-l scripts properly.
ePub3 will support this, and likely KF8 in about the same time frame or less. HTML5/CSS3 is the basis of both and it supports r-to-l scripts for Hebrew and Arabic, and vertical text modes needed for Asian scripts.
Amazon is launching Kindle in Japan later this year. If they add the CSS support needed for vertical text, they might as well add the necessary support for r-to-l also (they are using WebKit engine, it supports all of this). But we'll have to wait and see.
In the mean time, there's PDF.
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