As a rule, when writing declarations for our clients, we do not address any arrest that did not result in a conviction, because, without the conviction, it is not conclusive evidence of the underlying conduct. However, Judge Ito rightly chastised my client (well, actually, me) for not addressing in her declaration the circumstance surrounding the 2010 arrest. As he pointed out, "in the interest of justice" analysis requires consideration of all facts before the court, and the dismissed arrest is a relevant fact for the purpose of such analysis.
From experience, I suspect that most judges have already made up their mind one way or the other before they hold a hearing. However, there are those few judges who really look at the evidence before them before issuing their ruling. It is for these few judges that we write a declaration and, if possible, submit evidence of rehabilitation. It's not right to deprive them of the full facts that may be of relevance to their decision-making--especially given that the opposing side may well bring its absence up as indirect evidence of the petitioner's lack of honesty.
The lesson has a happy ending. After a lengthy back-and-forth, the court granted the petition in the interest of justice, finding that the petitioner's interest in rehabilitation, coupled with the solid evidence of the record's hindrance therein (a letter of employment denial based solely on this one conviction), warranted dismissal.