Yes...the RESPONSIBLE use of an A.R.M. is fine! Obviously you are one of the few that understands it and are responsible about it. A 1% cap per yr. is GREAT too. Typically only F.H.A. has this (a 1% annual cap).
The a.r.m. problems of today are not your RESPONSIBLE type nor the F.H.A. a.r.m.s it is the 2 yr. and the 3 yr. fixed with a 6% cap that CAN actually go up the entire 6% when they do adjust.
Which makes the problem not the concept of an arm, but the choice or arm based upon the situation. And the unwillingness of many buyers to move through the "starter to intermediate" home steps and accumulate equity before moving up. I saw too many buyers who had to jump right into the whole big shebang, rather than building up equity and buying up eventually. And using their homes as ATMs, rather than working toward pay down their debt.
I still maintain that arms themselves are NOT evil. And I still recommend that people talk to local, vested-in-the-community brick-and-mortar lenders. The apparently "cheapest deal" is not necessarilly the best deal. I keep my loan partially because of the ability to walk into a local bank branch, make my payment (along with that extra principal payment I always make) and walk out with my new balance receipt in hand.