I would like to get the next round of fights together, so Azurewraith, and whoever loses the other match, go ahead and make a new character. Level 3. They are in the Regional Championship, which is a slightly larger city where the winners of the outlying territories will fight to the death.
The downside to having to make a new character is you don't get to have the monetary rewards of those who win matches. Also, those who win can take any magic or unique items from those they kill. It's a way to give winners of each championship a leg up.