Seriously, an arena would be really cool. I could see Defiance Bay having one as a sort of underground cabal, or Twin Elms as an Engwithan tradition(blood sacrifice doesn't seem to bother them much). Maybe even develop a story and quest around it - I could see some factions of each respective location having problems with something like that, and others supporting it.

My first reaction was.... ewww.  But, thinking about it a bit more.... it could work, and it could be a lot of fun.

I must say I don't dislike this idea at all. The arena in BG:EE was a lot of fun, even though party fights weren't as exciting due to the nature of AD&D. Here the sheer number of build variations lends itself so well to an arena.

I always wanted an arena in PoE. You go in, tell the guy what you want to fight against and you get money if you win. The harder the fight, the more money you get. This would add a little endless gameplay, so you can still have some fun after beating the story, not to mention it'd make testing easier.

Nice idea.

 

At first I was thinking one-on-one combat would be fun, but then the first person to paralyze the other would probably win. So group combat would probably be best.

 

It could be an alternative to bounties for making some tough/interesting opponents.