The shower arm will unscrew from the wall, but likely will require a good bit of effort. Since it will be trashed, I would use a pair of pliers (slotted adjustable pliers).

Replace with either a 6" or 8" shower arm, as necessary to fit your new set-up. First wrap the threads with teflon 3-4 times before inserting into the wall. Snug the new one by turning the arm with the handle of the wrench inserted into the hole of the pipe. That way you won't scratch the new arm.