An Arafat assisination is not a blow to the US, England or any other coalition country. Unless OBL is just looking to elimiate competition in the terror market, or trying to set Hamas up for Pali leadership, this wouldn't make any sense.
It may not be a blow to the U.S or Britain but Bin Laden would like to see a hardliner in charge of Palestine. He considers Arafat a sellout and doesn't view him as an ally.