I agree, practical PvP would be extremely limited in the first 6 stages -- and it might as well be tossed out altogether, because the most likely usage would be for manipulations between players plotting together.

Joe the Wizard has already left, so that challenge would not be recognizable. Now let's say someone has finished the stage but hasn't left, and a rival attacker catches them and issues a challenge. The defender always has the right to choose to accept or decline the challenge. If the defender's +1 dagger was bought from the item shop and wasn't used on this stage, their only logical choice is to decline.

Where things get interesting is if the +1 dagger is used and already in play (whether pickpocketed or declared used after being purchased). Never mind the fact that the dagger would help the defender and that the attacker could potentially lose a life. The question is: under what circumstances should the defender be willing to accept this challenge?

The answer is... only when both the attacker and defender have an agreed-upon arrangement. This agreement will most likely take one of two forms: (1) the two "rivals" are willing to "help" each other out as necessary through PvP, depending on stage/class rules at various times throughout the tournament, or (2) attacker bribes defender and agrees to pay a portion of the attacker's share of that stage's spoils to the defender if they succeed.

Considering what happened in the last IBT, I think it would be better to reduce the chance that you get confused and tripped up by your own rules and game mechanics. So let's just eliminate PvP this time around.