There's a lot more to building muscle than just eating protein ... but yes everything I've ever read has said that eating protein (preferably foods with casein protein like the kind found in cottage cheese) before bed is a good idea because it prevents a protein shortage in your body while you're sleeping.
And i'd wager the reason most cyclists have scrawny arms is because cycling doesn't naturally work your arms in such a way that you'd develop those muslces. Further, it doesn't stand to reason that long periods of "cardio" exercise would cause your body to 'eat" the muscle in one part of your body and not another. Your body doesn't choose which region to gather energy from when you're, say, burning fat, it's simply burned uniformly (for the most part) across your entire body.