Do you think it will be possible for one to create a multiplayer arena?

Not even remotely.

There is zero code for intersystem communications within Skyrim.

Good luck with that.

I think even if you were able to do it, there would be major issues with players simply cheating to get god-like weapons and armour. It would just turn into a contest of "who can mod in the strongest ranged spell and make their character invincible?"

Unless you put major restrictions on it.

I don't know. Ask in the mods forum.