We used to have this sort of even all the time in the past. Was GM hosted, used to take place in the middle of the Arena. All players would be inside a cage of those transparent blue walls, last man standing. This was way back when the server's population was significantly lower. Anyways, +1 to the suggestion or the basic idea of it. I'm not sure how i feel about having a ranking system, but that's just me.
We wouldn't be able to prevent from teaming-up. That's why we dropped doing LMS events - cause each time players from one guild were working together to kill the others and that made it kinda pointless.