You will see a greater difference between moon mode and the regulated mode when you are using nimh batteries. These batteries will have a steep drop-off when they are almost completely discharged. Normal alkalines and lithiums don't really have such a steep drop-off.
Since the ARC AAA is actually voltage regulated, you only see a noticeable moon mode transition with nimh batteries (or nicad), since they have a steep voltage drop-off, which is in turn directly reflected in the regulator not being able to boost the voltage enough.
Normal alkalines will give you some 'semi-regulated' light, followed by a more gradual dimming....
Peter wrote a lengthy post about the merits of having a semi-regulated light a while ago.
While it would be cool to have all lights be "fully" regulated for 90% of the time, followed by some low moon light, there are limitations (namely, the batteries).
In larger lights that contain constant current regulators, such as the ARC LS series and the McLux, the regulator will try its best to maintain the same current to the led's, until a certain voltage in (Vin) going to it. After that, it will just act as an efficient step-up and pass through the power to the led....thus giving you a nice, lengthy moon mode.