I think the technological issue is this:
All the textures currently in the game are already on the player's hard disk. Nothing is 'dynamically created'.
In order to have a texture (tv screen) in the game world that changes based on what happens on another zone ('server taking screenshots of a fight'), you would have to send that picture - as an image - to all clients who need to render it. That would, in the first place, require the server to actually render the fight (something the servers dont do). Hard, but not impossible.
However, currently the game sends VERY little data (positions of objects, movement vectors, status information) to the players. Client does all the 'hard work'. Adding even one small image of 20-30kb, updated every few seconds so client could plaster it onto a TV-screen in-game, would add greatly to the bandwidth budget of the game. Realtime is totally out of the question - you would be talking of a 'live video stream' to every client.
And the other way to do it is Non-Trivial(tm) - a true 3D-'portal' that shows something that happens elsewhere in the same zone. And that would rule out separate arena zones. I can understand why the programmer would be jumping around the room screaming for mommy... Basically the game would render everything around your character, PLUS another piece of gameworld (the arena), and then create a viewport to that 'second room' it's rendering and create that single texture from that. Somewhat computationally intesive to the lowbie computers, and definitely non-trivial to implement.
Considering how the client is probably done, it would require a huge reworking of the very basic bits of the client, and would require a hefty upgrade of the minimum requirements of the game. All for a nice TV-Screen. Don't think we'll get one. At best we could get a 'fake' TV-screen - a screen that cycles thru few dozen pre-rendered images of generic heroes fighting. Images, that have nothing to do with the actual fights inside. Would still, IMHO, be nice for atmosphere, but...