I don't know if this random encounter is new, new-ish, or I've just never seen it. I just left Loreius Farm when an npc labeled challenger approached me and challenged me to a wizard's duel. I've never encountered this before and was wondering if this was introduced with a patch or what?

It isn't new.

I have a question if this is new with patch 1.7. I was walking to Boethiah's shrine and there was a Hagraven that was shooting fireballs at me and my follower, and I got hit by one of the fireballs. Then randomly I couldn't attack anymore and I transformed into a werewolf. Has this happened to anyone else?

I did not have the cursed ring of Hircine at the time, I hadn't even started that quest yet.

It's been in since the beginning, it is fairly rare though. Only seen this on one character while I was in Whiterun, have never seen it again.

Wow I've had mages near lvl. 60 before and this is the first time I've seen it. Always something new.