I believe what you can get here with calculations are only rough approximations that can vary greatly depending on the condition of your battery.
If I was you, I would just plug the whole circuit on the arduino and measure the amperage drawn from the battery, obtaining this way a precise value of amperage. If it draws around 300mA (with the arduino), I would say it will last around 1 - 1.5 hours... (EDIT: if not less)
Actually, all depends on the way your battery behaves when it starts losing power. Usually, the voltage drops and the internal resistance increases, which comes with a decrease in efficiency. Better is the quality of your battery, smaller those factors will be.
I believe the 0.7 is an arbitrary constant that is meant to take in account those factors, because even though it is said to be 595 mAh, it may not charge to full capacity (if it is rechargeable) and by the time it had spent 400 mAh, its voltage will be too small to run the arduino.
Really, the best thing to do would be to just take a battery and test it on the field.