If it's based on the person and not the characters then that would discourage people from trying silly or otherwise not very talented characters for fear of it costing them their record. 

The 10% would be more representative of skill over the "beating them to steal their rank" plan. All you have to do is beat the top rank in one battle and get to the top of the ranking system just like that. To avoid that we could say you can only challenge the next best, but that would by default limit you to only be able to fight one specific person no matter what if you want to get up the ladder. This could be it's own tournament type thing but I wouldn't make it the main record keeping system.


The dojo could have things set up by us and just random practice fighting for everyone that any character can walk in. Perhaps the dojo has magical properties that stops attacks from being able to kill each other.

For the dice roll system we may need some sort of stats involved to see how accurate they would be to determine their dice roll needed.