Random disconnected thoughts:
I like the idea of a team challenge. Mission impossible style would work fine for me. Doing every class for each team is okay, but I'd be okay with less--with 20 classes x a few thousand turns each is still an awful lot of play time. I can't imagine that interest will keep up after the 14th or 15th PC at the same challenge.
Will there be any rules on the use of the teleport spell, given that it can be used to insta-win any non-summoner arena fight (including championship round...)?
As far as multiple attempts goes, my suggestion would be this: players are allowed to reroll a PC once if and only if their PC dies before they reach the arena. The challenge is to win the arena, not to get ambushed by jackals on the way there.
I would suggest amending Silfir's rule about standing in front of Dak slightly--the PC should be allowed to buy food from ratling traders as necessary.
Should we make non-CoC (I'd allow Terinyo for food deprived PCs too maybe) areas off limits? I'm thinking particularly here that casters can visit Bug Temple and get up 10 levels and still make it to the arena within 2000 turns (or whatever is required) whereas most other PCs won't have this rather significant advantage. Casters already have an edge by virtue of being casters anyway...
Hoping to win with every class, doomed. Archer, Barbarian, Bard, Beastfighter, Druid, Elementalist, Farmer, Fighter, Monk, and ULE Priest down.