One of the fun parts of fighting in that pit is that audience members will occasionally get targeted and yoinked, or otherwise lit up. I think it's hilarious, and a match should never be stopped if this happens. It also raises the skill cap a bit: camera-angle and clean target acquisition are part of the game. It kinda gives it that "Thunderdome" feel.
Plus I'd hate to discourage the occasional streaker.
I'd say the fewer rules the better: anything that you can do in a ranked WZ is kosher. Likewise if someone DC's, you suck it up and play on.
It ain't my tourney though, so do what you will. Just some suggestions...
In the last tournament we had someone stealth into the pit and come out of stealth in the corner during one of our matches, this is what I am referring to.