in a book i purchased "mastering the scales and arpeggios" by james francis cooke, he says:
"in arpeggio playing it is very necessary to expand the hand without injury. one of the most annoying conditions that can confront the teacher is that of having an exceptionally bright little pupil with a hand too small to stretch the chords in pieces that would normally be in the pupil's grasp...rubensteins hand was small, he seemingly delighted in using extended arpeggios and overcoming them by a skillful use of the pedal and by digital quickness....
one of the things which the teacher must observe is to avoid strain by alternating expansion with contraction and with periods of complete rest. the following exercises have been found exceptionally valuable, and have been successfully employed for many years...they are based upon the principle that in piano playing there are two distinct lines of movement (up and down and right and left). by continually exercising the hand in both directions and allowing sufficient time to develop naturally, the author has found very few cases that would not respond to this treatment...."
*before i copy these 'system of expansion' exercises - i might say that of the two methods you spoke about, i like something inbetween. when you are playing slowly, you can take time to use the 'motion' method, and as you get closer to the keys and faster, obviously less motion and more quick expansion and contraction with your arm (sort of ghost like) moving up the keyboard. your fingers don't leave the keys as much when you are playing very fast. they are sort of massaged and there isn't as much time for large motions.
SYSTEM OF EXPANSION for arpeggios (for young children)
#1 take a chromatic five finger exercise and use 123454321 in rh and 543212345 in lh on the notes going up and back down. end on half- note on C and E. (c, C#, d, D#, e, E-flat, d, D-flat, C- half note, E half-note) using 1, 3 for rh and 5, 3 for lh.
#2 use the same chromatic five finger exercise, but end on an arpeggiated dominant seventh chord (C, E, G, B-flat) and use 1, 2, 3, 4 for the rh and 5, 4, 3, 2 for the lh. then go back down the dominant seventh and do the chromatic five finger exercise again and end on C.
#3 do the chromatic five-finger exercise again, but end on an arpeggiated I chord (C, E, G, C using 1, 2, 3, 4 rh and 5, 4, 3, 2 lh) then invert (play backwards) and play five-finger chromatic ex. once again, and then whole note C.
#4 for pupils who can strike an octave, but want to make their grasp larger (tenths) try playing the (contraction) chromatic exercise and then (expansion) C, G, C, G with 1, 2, 3, 4 rh and 5, 4, 3, 2 lh.
you can also make another variant on these exercises by placing the contraction (chromatic five-finger work) at the top of the arpeggio, and then again at the bottom. so, in effect - you have #1 five finger #2 arpeggio up #3 five finger #4 arpeggio down 5 five finger #6 end note held out.
you can see with #4 that it would hardly be able to be played with motion - more of a quick sideways movement - arm even and moving ghost- like up the keyboard.
hope this helps!