Here I agree with you that PSG should not be favourites in London... Arsenal have shown that they can beat any club in the Champions League and PSG in my opinion are no stronger than Madrid at the moment... I compared PSG's game when they played Aston Villa away and it seems to me that Arsenal will play even better than Villa... But I still find it hard to make a prediction who will win... Both teams play well in attack and I expect BTTS and a lot of corners in this game...
PSG won't be favorite in London, but PSG is better than Real Madrid.
Real Madrid can't win big margin even met against mediocre teams, while PSG able to humiliate the opponents. Arsenal do have a good history, but sometime Arsenal is not consistent during big match.
The first leg Arsenal will win I think.