I decided I wanted to try my hand at providing a bit curvier answer to A better notation to denote arcs for an American high school textbook than what Werner provided. I also thought it would a good opportunity to practice a few of the tricks I've learned over the past year since I posted my original question.
Here's my approach:
\documentclass{article}
\usepackage{tikz}
\makeatletter
\newsavebox\ae@frown@box
\savebox\ae@frown@box{\tikz \path[fill] (0,0) to [out=50,in=130]
(2,0) to [out=150,in=30]
cycle;}
\def\ae@frown{\usebox{\ae@frown@box}}
\newsavebox\ae@tmp@box
\newcommand\arc[1]{%
\sbox\ae@tmp@box{#1}%%
\ooalign{%%
\raisebox{\ht\ae@tmp@box}{%%
\resizebox{\wd\ae@tmp@box}{!}{%%
\ae@frown}}%%
\cr
#1}}
\makeatother
\pagestyle{empty}
\begin{document}
Gallia est omnis divisa in partes tres, quarum unam incolunt Belgae,
aliam Aquitani, tertiam qui ipsorum lingua Celtae, nostra Galli
appellantur. Hi omnes lingua, institutis, legibus inter se differunt.
\arc{OK}\
\arc{ABC}\
\fbox{\arc{Too much}}
\end{document}

The effects are not entirely as I expected. For two or three letter arc names I'm fine with the appearance, but somehow the height is not being taken into account when the paragraph is being formed. At first I thought the boxes' heights weren't being calculated incorrectly. That's when I threw in the \fbox{...}. But \fbox seems to get the height correct. Even more interestingly (or so I think) is that if I use the following text
Gallia est omnis divisa in partes tres, quarum unam incolunt Belgae,
aliam Aquitani, tertiam qui ipsorum lingua Celtae, nostra Galli
appellantur. Hi omnes lingua, institutis, legibus inter se differunt.
\arc{OK}
\rule{2pt}{1in}

There height of the rule is also somehow ignored.
Clearly I'm doing something wrong. Can someone explain what's happening here?
Post script: I did not use Werner's \setbox9=.... approach because I'm not entirely sure I understand that approach (I'm not sure whether I might be overwriting something with that approach).

{!}for the height. But I don't see how that matters for why the height of the box (and following boxes like the\rule) get ignored. – A.Ellett Apr 30 '14 at 04:28\ooalignremoves the height/depth of its argument. – Werner Apr 30 '14 at 04:300.5\ht...seems to have a nice effect.... – A.Ellett Apr 30 '14 at 04:32\ooalignuses the height of the first and the depth of the last line for the whole expression. But this is correct here, the height of the first is always greater than the height of the second because of\raisebox. And the height of the second line is smaller for the same reason. – Heiko Oberdiek Apr 30 '14 at 04:34;-)– egreg Apr 30 '14 at 10:53