Well. Again - not saying it can't be done; only that it's a bloody difficult thing to do.
Everyone is there to be entertained.
Everyone is there expecting to matter.
Everyone is expecting to be the winner at least or more then 50% of the time.
If things are regulated by objectives (like T1-2 do this, while higher tiers do that and whatnot) or numbers (a "battleforce" is limited to 1-2xT5, 4-6xT4...15-20xT1) then yes...But in all out free for all? In an MMO, where the top dog is beyond invincible to the little guy? .....
Anyway. Good idea. Cannot be unregulated. It will otherwise turn into "Maxed out participants only kthx"-club.
No one wants to lose or be killed just by default which is how the things will be if there is no regulation on what can fight what and how.