Is it acceptable to extend results from an arXiv paper that has not appeared in a journal?
I understand your logic, but I do not think that many people treat papers on arXiv in that way.  Papers on arXiv are public unlike the papers you reviewed or the work you just heard by personal communication.  As such, extending the results in a paper on arXiv is a perfectly acceptable practice as long as the second paper cites the paper on arXiv properly.