I just tried playing Arc the Lad on FPse, on my Droid Incredible 2 today, but I'm running into some bugs with the battle system, where movement just isn't available for either Arc or the green slimes in the first battle. The only movement square available is the one each character/monster is standing on. I know it's been about 12 years since I played this game, but I'm pretty sure it's a bug with how the emulator interprets the rom on my phone. I'm going to pop in my copy of Arc the Lad 1 into my PS2 tonight as a control to test it out.
In all honesty, I didn't expect the save file conversion from 1 to 2 or from 2 to 3 to be preserved along with the emulation. But I don't know enough about the game-to-game transfer process to tell you why. Conceptually, though it's because that conversion process is custom logic that is specific to this series of games. It is something that probably would not have been factored into the build of the emulator by the FPse developers.
AtL2 was one of my favorite PSX games, from when I first played it 12 years ago. It will be disappointing if this doesn't work, since I would love to replay these games on my mobile device. If I upgrade to a Samsung in March, however, I'll have to give this another shot.