a small pvp enabled area themed like an old school fighting circle, palisade arena or some other period correct type building in the capital cities where newbs could go to practice fighting, random people could watch/participate in duels or grudge matches, people could make bets, a good focal point for GM events etc. would be a nice addition.
i would make it so that the area is an FFA area where you can be stolen from or murdered like anywhere else outside the capital, but can see how folks would cry about it so maybe disable murdering people in the arena.
with this first step you could then implement a betting system where right clicking on a character inside the arena adds a gump pop up for those wishing to place a bet, the gamblers deposit their silver into the menu and the winner is then rewarded when his guy wins. this could be a silver sink as well if making bets took xx% of the winnings.
this would also be the first step for a controlled environment tournament or dueling ladder.