I'm going to have to side with Rei on this one. I honestly don't think it's in character with the Star Army. Even though I'm a person who sort of enjoy's epic conflicts, it does seem to go against ideals of the YSE - heck, we made it blatantly clear back on the Sakura when dealing with the lorath (we we're willing to go through a fighting ritual, but when we learned that they actually just wanted us to suffer to boost their own egos - or so it seemed - we reacted rather badly).
I'll agree that the YSE does have it's shadier parts, but it is meant to look like the perfect society or some such. As far as I know, the bloodiest events in the Empire actually happen in the SARA project sweetheart, which supposedly pits a hundred nekovalkyrja in a free for all deathmatch to see which one comes out alive... but then again, this is an extreme.
If I may suggest an alternative... I'd go for olympiads. Olympiads could involve fighting disciplines, but would also allow for other facets to come out, such as sports (I'll admit it isn't a big focus of the setting, but it ~would~ look better while still allowing for competitive fighting in some cases).