This is sort of right, but not for the reasons you give.
If you report that someone has been arrested, readers will understand this to mean that there are “grounds to suspect” or (possibly “strong grounds to suspect”) that they are guilty of the alleged offence. In libel law terms this is known as a “Chase level two” meaning.
For a newspaper to succeed in a defence of truth they would have to prove that there were indeed grounds to suspect them of the offence. So they’d need evidence; they can’t just say “it’s true he was arrested” or “the arrest proves there were grounds to suspect him.” It may be that the newspapers could pull the necessary evidence together though.
However, the press would also likely be able to reply on the defence that publication of the arrest was in the public interest (s4 Defamation Act 2013).
It’s now academic as a deceased person/their estate can’t sue for libel.
On the privacy side, people have a reasonable expectation of privacy until and unless they are formally charged with an offence, as a rule.
[And that, ladies and gentlemen, concludes the only time I have known more about something than prh47bridge]