Your Guildies are wrong. Multi-boxing is legit, Blizzard have said it is, they have also "more or less" said that the programs we are currently using don't break their Terms and Conditions.

As for Multiboxing in Arena's being unfair... Well, you must be a pretty poor arena team if you get stomped by one guy. A multiboxer will never be as good as 5 seperate well coordinated players. Of course there are always exceptions to the rule, Ellay for instance is doing pretty damn well with a friend helping out. Luck also plays a major part in arena's :-)