So, because I know my fellow mech-heads are probably curious:
Arma will boot and sort of work cleanly in Starsector 0.96a, so long as you use the last version MagicLib released for 0.95.1 (which was 0.46.1), which does work in .96a.
However, Wisp is making some serious (and fairly necessary) heavy changes to MagicLib's structure for the new series of updates to MagicLib that are going to be in .96a, and the current release version of Arma is completely incompatible with that. So using the current version of Arma also locks you out of any updates to MagicLib, as well as any updated-for-.96 versions of MagicLib-dependent mods, until Arma is updated.
There are also a few bugs. Most notable is that you can't get strikecraft to dock with carriers; the rest of the fighter-like behavior still works, but trying to dock just makes the strikecraft drift past and then go into normal auto-battle behavior. Perhaps relatedly, the Strikecraft and SILVERSWORD hullmod tooltips will crash when brought up via mouseover. Needless to say, this defeats some of the purpose of the Strikecraft-based ships.
(EDIT: One more big thing is that, predictably, WINGCOM isn't quite working right; it's another crashing tooltip on refit, and pilots don't show up on the intel screen (though it doesn't crash). They do seem to mostly work in combat, though, and it doesn't... seem like they cause crashes? Oh my god I'm so stupid for even trying this.)
Everything else, though, functions basically how it should; Cataphracts still help with raids, all of the selectable weapons on various mechs work fine, the actual SILVERSWORD ship system on the Valkazard and Garegga works fine, the Valka's drug-dodge works, et cetera. If you can get around those problems (by sticking to mobile armors, for example), then the mod is mostly functional.
Still, what's needed to make it work will limit your other modding options, so unless you just absolutely cannot live without the mod (hi hello), it's best to wait until a proper .96 update with new MagicLib compatibility comes out, or just stick to .95.1 for now.
(But then how am I supposed to get my mechs involved with the Sindria stuff, which is just about the most Mecha Politics Starsector's ever gotten)