Noob questions!

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I agree with both Johann - the Arena concept is fun - and Pocus - it's an open door for abusing AIs ...
May I suggest some tweaks that I think will make the "game" fairer and more interesting ?

1/ NO items in the Arena, the combattants enter naked, all their stuff go to the Lab
2/ At the end of the fights, all survivors are fully healed/cured/restored/curses removed, they come back as new, only the dead remain dead !
3/ Prizes should be various powerful unique artifacts, or a big pack of gems, not always the same half-potent but cursed weapon

I think that those rules would kill most of the arena cheese, the players would either have to pass on an opportunity to kill enemies and gain something worthwhile, or send themselves powerful leaders (as the AI does and as the devs intended to design Arena combat).
I concur that the Dom1 Arena prize isn't that good, it's nice with a supercombatant pretender or a big fighter type leader if you get it very early, but even so ends later as a drawback as you can't get rid of it when you can forge better stuff ...