Personally, I would play the melody a lot, maybe for a few choruses until it is totally in my head then start to embellish it little by little. I think the key is to make those melody lines very strong in your ears so that when you improvise they become natural target notes. The other thing I like to do is play melodies without regard for the changes, pure by ear playing, which can be hard to be satisfied with but can really force you to listen to the chords, as opposed to thinking about their quality and what scale works over what etc.
As far as target notes vs arpeggios, I kind of take the approach of choosing my target notes sort of like Herbie Hancock and John Abercrombie. The idea is that any tone in a chord (even extensions) can be target notes, or resolutions. If I am playing over Cmaj7 I may be just as likely to resolve to D as I would be to E. Both of these guys would say, it doesn't necessarily matter where you are, as long as you know where you are going. This idea also ties into the melody being the key, if it is strong enough in your head you will tend to resolve to notes and lines within it, which in my opinion tends to put your improv in a nice context as oppsoed to just being lines. I try to think of sounds, intervals, and for practice scale degrees when I'm imporvising. I don't think scalar because I always felt like that ended up being mindless noodling for me (like choose a postion, now dick around).
Just my 2 cents.