Well, of course all our solutions for '500 years issue' are in a way corrupted since from the beginning, we know what we want to "find". The ancient buddhist were also well aware of the problem. First the duration was extended to 1000 years by saying 500 would be without garudhammas. But then 1000 also was not enough, so Buddhagosa made it 5000 assuming a gradual decline every 1000 years. Much more has been done by Mahayanists. They dealed with the issue in a straightforward Mahayana way: simply composed sutras, where Buddha himself proclaimed much longer duration of his teaching.
The attempts to solve this '500 years problem' are still done even today, but with modern methods - namely to call it a "later addition" (since it is obvious, that everything we don't like is a latter addition). This is however difficult to support since this passage appears in the scriptures of many non-theravadin early schools as well.
My position (and certainly I also know what I want to "find") is that we shouldn't try to make 5000 or 2500, etc. out of 500 years since it is not supported by sutta. I would say ~500 years after the Buddha the Dhamma became impure due to appearance of Mahayana. Mahayanists appeared around that time, and became very fast the majority. Vinaya might also had reached the level, when there were more corrupted monks than the good ones to the extend that it was not possible anymore to turn back.
It would be something like if we have 100 people who are healthy we can say "This group is healthy", but if 60 of them are sick we cannot say "the group is healthy", so the healthy group disappeared, although there are still some healthy people. The same is with disappearance of the true Dhamma (it is my idiosyncratic interpretation).
Whether there are still arahants, I don't know. Everyone who is sure there are, shouldn't forget what Buddha said to the householder Dārukammika (AN6.59):
Since, householder, you are a layman enjoying sensual pleasures, living at home in a house full of children, using sandalwood from Kāsi, wearing garlands, scents, and unguents, and receiving gold and silver, it is difficult for you to know: ‘These are arahants or on the path to arahantship.'
And those who are sure there are not, shouldn't forget brahmin Pokkharasāti (MN99):
Master Gotama, the brahmin Pokkharasāti of the Upamaññā clan, lord of the Subhaga Grove, says thus: "Some recluses and brahmins here claim superhuman states, distinctions in knowledge and vision worthy of the noble ones. But what they say turns out to be ridiculous; it turns out to be mere words, empty and hollow..."
"How then, student, does the brahmin Pokharasāti understand the minds of all recluses and brahmins, having encompassed them with his own mind?"
"Master Gotama, the brahmin Pokkharasāti does not even understand the mind of his slavewoman Puṇṇikā having encompassed it with his own mind, so how could he understand thus the minds of all recluses and brahmins?”
“Student, suppose there were a man born blind who could not see dark and light forms... He might say thus: ‘There are no dark and light forms, and no one who sees dark and light forms..."
I personally hope there are arahants