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If the action inside the arena was taking place in the same instance (server process) as the zone itself, then this would, in fact, be trivial, no more real work then rendering a few more characters on the street in front of you, with an additional transform on the render view to align with the geometry of the billboard.. After all, the view you see when you play is essentially an animated texture running at 20 frames a second splatted on the view frustrum. The real issue is needing to send data not just from the server process your currently in, but from seperate process where the fight is taking place, as well.
Now what they could do is...
...Have the zones where top-ranked players compete be more like a city zone than an instanced zone so that you can have more than just 8 players in them at one time. When you enter the Arena, you see special doors leading to championship matches, which take you to these special zones. To avoid clogging the client-side renderer, each team that enters gets its own "suite" as described above with a wide screen TV watching a camera "view" into the Arena. That would limit the network and render load to the team, and the players or teams competing. The only additional work is, as I mentioned before, one additional renderview and transform, plus the camera logic, which could simply cycle from one competitors over-the-shoulder cam to another, though slightly more sophisticated cameras (weighted average of team position, etc) wouldn't be too tough to implement.
One could argue that a zone set-aside for nothing but championship team-ups might not see a lot of traffic, but I can't imagine it being any worse than the traffic through Faultline or the Rikti crash site.
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I especially liked this idea but i just wanted to suggest this, why not have the arenas as city zones(as said) but instead of going inside a room the fights copuld be outside and surrounded by force fields (like the ones used on tram mishes) and have heroes view it from outside force fields in the air or in the ground real-time.
i m not a computer peson so i dont kno if my idea is completely impossible
