So is it possible for somebody in a battle royale with battle royale life points to play against somebody not in a battle royale? 

That seems like it's rife for opportunities for abuse with something like Gift Of Greed abuse with a friend. Would probably make more sense if your lifepoints weren't affected by duels outside of the battle royale, or that just by accepting a duel you forfeit the battle royale, but i wouldn't know. I'm not KOGaming.