Protecting 0 to 5V Arduino pins from +/- 10V oscillating input
The negative excursions are no problem. The only possible issue is the positive excursions raising the +5V rail out of normal operating range. The maximum current is (10V - Vf- 5V)/10K, so less than 0.5mA. 

If your circuit always draws more than 500uA (even in sleep mode) then there will be no issue. If there is something like a power-on LED which draws more than 0.5mA there will obviously be no problem. 

Your model does not simulate this accurately- you model the 5V supply as a "stiff" voltage source that can both sink and source current, whereas (most) real voltage regulators cannot sink current. You can simulate the effect, if you want, by putting an ideal diode in series with the +5V supply.