When you refer to a character as overpowered for Arena, it's because they are using one or more of the 'banned' powers, which simply do not allow for fair combat, because they can only be countered by hyper-specific powers.

Examples are: Stopping time, reality distortion, significant gravity manipulation, non-limited teleportation, and the like. At the highest tier, almost everything goes, but even then there are limits, irregardless of 'setting' or 'context'. 

It's very easy to create a character that is broken and overpowered at any tier level, and you will find no one is interested in fighting said character.