I've recently raised my hand some milimetres from the strings. I wasn't quite anchoring, but now I try to have no contact with the bridge whatsoever except in palm muting.

Problem is, I've got pain in my right upper arm, the part where the tricep joins the deltoid and shoulder. Any ideas???
relax. slow down. sounds like your powering through it. i used to do that before i took lessons. my teacher made me slow down to a mere crawl. yeah, it sucks...but now i can play better then ever. take a month or a few weeks and just go back to the basics. it will pay off in the end, trust me.