From the book,
An Unauthorized Biography, Arnold, by Wendy Leigh:
...since 1977 rumors have circulated in the bodybuilding world that during the filming of Pumping Iron, the pseudo-documentary film that transformed him into a legend, Arnold said he admired Hitler. When contacted for a newspaper article in 1988, George Butler, the producer and director of the film and still a close friend of Arnold's today, admitted that during the filming of Pumping Iron, Arnold definitely did say that he admired Hitler. Butler then conceded that the remark was cut from the final version of the film, adding that Arnold expressed his admiration of "Hitler and Kennedy in almost the same breath as people who are leaders." When asked why Arnold admired Hitler, Butler replied that the context in the film was that Arnold was saying he had "always wanted to be remembered like the most famous people in history, like Jesus and so on. And I think his admiration is for people who are so striking that they would be remembered always."
pp. 87-88
The book goes on to say that the film was not scripted. It was story-boarded. IOW, the entire movie was not scripted. There are witnesses, the author notes, who have seen Arnold do a "Sieg Heil" salute and play records of Hitler's speeches.
He answered this issue in a 1989
Penthouse interview by claiming through Butler, that his interest "was only that of a student." Butler claims to have forgotten this exchange, and says he never saw any Nazi paraphernalia at Arnold's house. (others insisted that he did have some)
Arnold goes on to say he hated the Nazi period.
According to the author, another bodybuilder who witnessed a "Sieg Heil" speculated that it "was expected of him." He personified Aryan supremacy and Germanic will. His father had been a Nazi, so both his heritage and image were inescapable--but not ineradicable. Arnold, instead of underplaying his roots, advertised them.
The author goes on to say that the goal of many bodybuilders is to carve themselves befitting a master race. Power and dominance are valued above all. Allegations of Nazism didn't hurt him in the body building arena. (paraphrased)
pp. 89-90