My cat does this, too - not while I pet her, but when I come in a room
sometimes. She'll do the arch, fluff and throw her paws up in the air. It's
ridiculous little dance. She calms down in a little while, but why does she
get so bent out of shape?

Our kitten does the same hunchback exercise whenever we come home. I
think in this case he's just doing the stretching after a good nap (I've
seen him do it directly after sleep). He would also do it occasionally
when being caressed, especially when he was sleeping or when he comes to
get his portion of attention.
If your kitten doesn't hiss or attack your hand while hunching his back
it could simply be his way of shaking off the sleep. If he shows signs
of aggression then he's either scared or doesn't want to be disturbed.

You're stimulating him, and perhaps he's showing you that he
wants his back scritched also.

If it were threatening, other pre-physical signs would manifest
themselves,
such as his ears laying back and slanted eyes.

That said; Big Mama loves her back gently rubbed and scritched...
but her favorite pet is 'the neck massage'.
Dangerous pets for her would be:
any involving 2 hands, and the belly pet...you will learn not to go
there.

My little guy does that from time to time and it is hilarious.  I have no
idea what causes it but it is faux anger... if I try to "get him" he
"attacks" my arm with paws (no claws) and licks.  It lasts about 30
seconds.  His tail gets all puffed out and his ears are back and pupils
dilated; with other cats I suppose this would mean aggression but with my
cat, towards me, it means play time.

If your cat is willing, it may mean the same thing.