I'm pretty sure evil characters are allowed. Notdeadyet did mention that even demons could send in their champions. So that raises a question: Is this arena like a multidimensional neutral ground where gods, demons, etc. come to pit their champions against each other to settle disputes or just to entertain each other? Some background of the setting would be nice.

Also, I'm kind of hoping perms-death isn't going to be implemented. I'm pretty sure gods can revive their champions over and over again. Between fights, that is.