Really wanted to post some of that below the fold. Sorry everybody.

I've only ever been to fat burlesque and queer burlesque, but in my (weird) experience, it was only mildly arousing (despite the fact that I legitimately found the performers to be hot people), and most of the crowd was either directly friends with some of the performers or were somehow, I don't know, part of their extended community, so while there was a lot of, "Oh, you are so hott", there was little of "I am staring at you with lust" and I doubt more than 2% of the viewers went home to jerk off about it afterwords.

I think the good things about burlesque are that it seems very driven by the performers interests (rather than primarily by the viewers) and there's this winking self-awareness that both the performers and the consumers share.

Is it hott? In my book, only a little. And I also find it to be a sort of irritating genre as I think it's said whatever can be said about third wave, women's control of our own sexuality, and vintage fashion.

Burlesque is to stripping what football is to roller derby. That's my reaction anyway.

I've only been to one burlesque show and it was definitely a gay campy performance art thing; the MC was a man dressed as rabbit and sounded like John Waters. Well, and it was at The Warhol.

Is burlesque supposed to be arousing?

Without looking it up, I always thought that is part of the literal definition of burlesque.

I think in it's original context it was supposed to arousing. Acceptable responses might have include hooting, hollering and whistling. But the show would also have included a lot other material, music and comedy acts, that could be yelled at as well.
What we now call strip clubs are really the social/economic direct descendants or burlesque. My guess is that movies replaced most of what burlesque provided except the sexuality, so the strip tease portion was the element that survived. Even in the 50's the stripping acts would have a jazz trio and a comedian playing between them. The pole dancing/lap dancing stuff is relatively modern.
Culturally appropriate is a pretty loaded phrase. Whose culture and what does appropriate even mean in that context? I think the idea that art should be divorced from eroticism is puritanical and rather sad. While I don't think strip clubs are a sign of a healthy attitude towards sexuality in modern culture, I wouldn't want to live in the culture that bans them.

well the burlesque I did and saw was more of a camp comedy number then anything else, often mixed in with musical acts and the like. Just part of a larger show, there was an element of arousal, but also lots of making fun of that arousal. I know that in the west coast (or at least L.A) scene it was more a showgirl-look-at-my-huge costumes and athletic dancing-thing. Strip City has a few good things to say about it, mostly about The Hated Pole.

Hey octothrope! You saw Scotty The Blue Bunny! He's a pip.