I love the idea but the success of this ultimately comes down to the GM.

I hope you're not afraid of offending people and enforcing your[i] own [/i]rules (so many GM's do not do this) because I otherwise foresee people doing so much bullshit. The reason why the Arena section is a scary place is because theres 0 tolerance for bullshit there and plenty of users can't take it that they absolutely suck and repeatedly get destroyed when they have to use realistic logic.