Here would be a cool thing to hack:
HubMed is an RSS interface to PubMed (the equivalent of arxiv, but much better, for the bio/medical community). Plug your PubMed search into HubMed, and lo and behold, out pops a search with an RSS feed you can subscribe to. Think of it as a specialized Feedster for PubMed.
The CoRR now has an experimental full text search to go with their category searches. You could always subscribe to RSS feeds for new papers in specific categories. Wouldn't it be neat to have a Feedster-like interface for general text searches, so I could get all new papers that mention "art gallery" for example ?
It seems like it is not hard conceptually: a web form to process requests for searches, and a crawler that queries CoRR (along with some parsing goo to make XML).