From the manual:
Tempo – This knob speeds up or slows down your arpeggio relative to the Arp Rate. When Launchkey Mini is used as a standalone controller, this knob ranges from 40 BPM to 240 BPM. However, when synced with Ableton Live, this knob will have no effect.
I was able to control arp tempo by changing Reason’s BPM (with clock send enabled) while the tempo knob itself had no effect whatsoever. So that part worked as described. Unfortunately the timing itself was horrendous.
Coupla things could’ve been happening here. It might be that there’s something different going on with ableton’s clock output compared to reason’s; but I since I don’t use ableton that’s not much use to me. Or it could have been a faulty unit, or overall crappy USB midi.