The dust (or whatever that is) from her arm probably her power. Just like Suika who capable to turn herself into dust (or whatever you call it), since she lost her arm, her power are bursting out from her wound. So she gather her power into a solid (not as solid as real arm but good enough) arm like, and put a bandage on it as a seal to prevent from leaking out.
Of course, this theory might only possible if Kasen indeed an Oni just like Suika and Yuugi.