Good work on the Arena ideas, let me through in a few ideas of how I think a dueling option should work.
Both parties need to consent.
Duel \"button\" has a timer on it of 15 minutes to prevent spamming people with duels.
When both parties except the duel, all buffs are dropped and bystandards are prohibited from casting heals or buffs on you.
Each player has the option of pressing a forfit button that will allow the player to back out of the duel (I am not 100 for this idea, but it is a management tool)
Players should have the option putting money in a vertual pot that the winner will get.
Dueling must take place outside the town gates.
Your dueling score card is attached to your name and a /who command will allow others to see it.