The arc reactor could be a beta radiation (electron) collection device
Tonys new element he made in Iron Man 2 gives off an electric blue glow
So I am thinking that his element goes through a large amount of beta decay
This would also be why the poladium inserts get "burned up"
If this is how it works it could be possible to build a prototype irl
The blue ring could be a collection medium for the electrons that is excited and glowed blue as a result of a very large amount of electrons flowing through it
The reason for the electric coils on it would be to direct the flow of the electrons in a circle around the medium (to act as a power buffer) and to also direct and regulate the flow of electrons to the outlet of the reactor where the power would come out
So if we find an element that has a sufficient level of beta radiation
we could possibly build an arc reactor
this device could also work as a battery of sorts just by pumping and electrons into it
If you have any ideas of what could work as the medium or a safe fuel source please reply