You could certainly read this with an Arduino but I would have thought that you are better to read it using an analog pin so that you can set your threshold to whatever value you wish.
At the moment your peak is 340mV, which is only 7% of the full 5v range - not great for accuracy.
However, the Arduino has other internal voltage references and also can take an external reference signal: http://arduino.cc/en/Reference/AnalogReference
Make sure nothing is connected to the Arduino Analogue reference pin and then try:
That will set your analogRead function to use the internal 1.1V reference signal. You then have a peak at around 30% of the full-range, which is entirely workable.
Then you simply write a sketch that measures for one second and increments a counter every time the signal goes above 250 (for example) and then drops again. At then end of your second, compare the number of counts with a threshold value (e.g. less than 65,000 and you say you have detected something). Obviously, you could measure for less time, but why do you need to?
Three positive results in a row are then taken as a detection and you light an LED (or similar).
The thresholds may need tweaking but it should work well. Why not output the numbers to serial to start and see what you measure under "detecting" and "not detecting" conditions and pick thresholds appropriately.
Hope I'm not barking up the wrong tree here.