I just set my brewery up to recirculate the mash with a pump and have done 1 batch on it. It worked great and I had very clear runnings, I did lose some heat but found that turning the burner on gave me a constant temp and would not even get close enough to scorching the grain. I set mine up so that no part of the recirculating wort was in the air. If your sparge arm moves, I say put it in the grain bed so it doesn't drip at all.
It took me awhile to figure out how to use the same arm for sparging as for the recirculation but i finally settled on a piece of copper tube poking through my lid that I could put a hose clamp on in order to raise and lower the arm. I have about 12 inches of adjustability.