mdls and entities are not the same (as you are aware). You load the file once and entities who use that arrow.mdl only "link" to it. Each new entity takes about 3-4KB of memory if I'm not mistaken, unless you (ent_)clone it (and some other stuff like c_updatehull consume more memory I guess).
Your problem probably lies somewhere else. Debug your code, check the statistics panel, not just the FPS. I bet the number of concurrent functions/ actions rises constantly, or maybe the performance impact comes (to some extent) from rendering more stuff (and/ or c_trace with USE_BOX and a bunch of arrows lying on the ground (which you can speed up with c_ignore)).