The earliest reference I've found to this bust is from 1854, in the section 'Supposed Bust of Arminus' of The Ruins and Museums of Rome: A Guide Book for Travellers, Artists, and Lovers of Antiquity by Emil Braun.
The author states that apperently this bust was earlier identified with Cecrops, but
The supposition of a professional archaeologist which reached me
indirectly, that this bust may represent the hero of the Teutonic
civil war struck me as a highly suggestive idea.
The author agrees that
The abundant hair the incipient down on the chin the rather massive
cheekbones announce the son of the North.
The article also states that the bust was originally found near Naples, and
the Britanica article lists it as in the Capitoline Museum, so I don't find any significance to the Dresden reference, unless that is its current location.
The consensus seems to be that the hair is too un-Roman like, and in fact, if you look closely, the trace of that 'barbarian' mustache is visible over the lip. Some more recent works such as Four Days in September: The Battle of Teutoburg by Jason R. Abdale discuss that this may have been a more generic image of the 'Germanic Barbarian' type.