Wouldn't this just be like any other Ladder but with the small diffrence that higher level players would be able to smash the spine out of your body?
There's alot of PvPers in all ranges of the game - So let's say the level range set would be 1200 - You would probably only see players level 900+ join to have a chance to match the stats (or they would simply hit players offline as it goes already on the regular ladder) - If a level 500 player joined such a ladder they would just get wrecked over night?
How is this diffrent from the arena? besides you can use buffs (and high level players will have the benefit of having much more powerful buffs than the players who only just got the level for the allowed maximum item levels)