Tournaments are hosted in different venues, the arena community is a transient one and tends to move around a lot to clash with other communities. 

The last tournament prior to this one hosted on RPG was poorly managed and designed, it was about seven months ago I believe. Before that there was the Black Mountain tournament that went relatively well, that was about 11 months ago. Before that there was the ranked system, which brought a lot of extra activity in. The official RPG tournament before that was also poorly designed and managed. Unfortunately, not everyone is cut out for running a tournament, but the only way to find out is to try.

I don't believe this tournament will be the saving grace of the arena, I know that it will bring about a surge of activity because they always do. The Arena doesn't really need a saving grace, the players are all still around, they communicate and for the most part are friends and frenemies. Arena isn't for everyone, it's an intense and competitive atmosphere that turns a lot of more casual roleplayers off, and so it will always be a small but necessary place on this forum and many others. However, as Vordak mentions, taking it off the front page will simply reduce that inflow of like-minded individuals even further. Hell, even the current tournament is being hosted by someone offsite and brought in about ten new players, who may never have even seen it if it was melded with 1x1 as you suggest.