I believe it would be a good feature to have. Yes, I know Online is coming out soon and will have PvP, but I want to see this implemented into an Elder Scrolls game.
Technology is not yet advanced enough to run 2 player co-op in the open world, but what is stopping us from having a fairly easy to make arena?
I believe that an arena would be a good addition to the game, where you can go to the arena and fight as many CPUs as you want for money, and they have another battlemaster there that can queue you for a match against a player opponent based on your level. Instead of your character dying, they yield defeat when their health reaches 0 and you can walk out of the arena at any time.
Because the arena is only one small area, I could see the option of that happening. It would add an interesting dimension to the game.