The only use I can see for an Arduino in this scenario is to drive the display and manage station presets and so on - which implies to me that you would be interacting with the radio receiver at quite a low level and not just using it as a self-contained device. The Arduino probably has rather less power than the processor in a modern digital radio/CD player and I'm skeptical that it will enable you to make something 'more powerful' unless you envisage it adding new capabilities, which you haven't hinted at yet. Do you think that a DIY Arduino-based AM/FM receiver/CD player will do the job better than a commercial device? I don't see how.