I've moved it a bit down and also a bit to the left:
About the position: I agree with 3run, a little bit down might be good.
About the arm itself: If you keep the current models for the players then the arm does not fit because its "naked" and the soldiers all wear long-sleave clothing
edit: Maybe just take the arms of your already existing soldier models?
About hands, I thought using current soldier arms, but texture and arms are very low-res and it looked very ugly in first person view. In counter-Strike: Source also the arms of you player are naked, and in 3rd person view a lot of characters use long sleeve clothing.
