At 9 mana, Rafaam is a bit of a "Win More" card in constructed -- that is to say, he's a decent draw if you're already ahead, but if you've down on life and have an empty board to your opponent's full field, he's not going to do much.
If things are more even, as they are likelier to be in Arena, he's an okay (if not quite decent) play. As you say, the 7/8 body for 9 mana is inefficient. But you mustn't consider the stats in a vacuum. His battlecry gives you your choice of one of 3 artifacts that you can play for 10 mana on your next turn.
Lantern of Power -- The more minions you have, the better the pick this is, since if you have even 1 minion left at the start of your next turn, you get to throw a 1x / 1x minion at something. Hard. (And preferably to your opponent's face!) If you have the minion to play it on, this is comparable (though worse against Taunt) to the 10-mana Pyroblast -- and it only gets better each turn your buffed minion sticks around. If your opponent doesn't deal with Rafaam immediately, he can swing in for 17 damage on the following turn!
Mirror of Doom -- A more situational pick. Fills your board with up to 7 3/3 mummies. This is the slowest of the 3 artifacts, and since the mummies don't have taunt or charge, if you opponent can ignore them to eke out a win, they'll do just that. Best used in the late game when both players are topdecking, where a single card is unlikely to swing board control back the other way.
Timepiece of Horror -- The weakest of the 3 cards, essentially an upgraded Avenging Wrath or Arcane Missiles. But 10 mana for 10 random damage is relatively awful (Arcane Missiles is 1 mana for 3 random damage for example, and Avenging Wrath is 8 for 6), and I might go so far as to say, "Never Pick This", because outside of some strange, uncommon corner-cases (such as stealthed, low-health minions that you can't otherwise handle), it doesn't compare favorably to Lantern of Power.
In Arena, it is reasonably likely that if you get out Rafaam, you can either play Lantern of Power for the 17 damage face-nuke, or Mirror of Doom to secure board control. This is by no means certain, since Arena games can often end before turn 10. Rafaam is strong if you can use both him, and his artifact, and I'd probably not hesitate to pick him in an Arena run if your won't kill your curve and if there isn't a better Legendary (Dr. Boom comes to mind!) available when he appears.