i have also looked into this.
One of the problems (no need to talk about many others) would be that with a loop station we often want many loops to play simultanously, and even be able to controll each of them independently. I found that this whole thing isn't so easy to do with an Arduino.
in the end, i decided to make just an Arduino midi foot controller, to be able to use looping software in my laptop keeping my hands free to play some music, which turned out working great!
You can see a small example here:http://youtu.be/x1z_OL6l7G4
would this be an option for you?