The problem with arena is that I don't think Blizzard knew what they wanted from it.
I believe the whole arena idea was probably lightly suggested, but then some marketing minded exec made it a must-have feature, hoping to duplicate the success of SC style competitive gaming. You can see some evidence of this in the way Blizzard has tried time and again to leverage arena with various competitive gaming bodies.
Long story short, the current arena implementation tries to straddle serious competition and casual accessibility, but creates a mutant mix that's rich for exploitation. If Blizzard intended to focus arena on serious competition, they would have implemented gear resets based on ratings or team disbandment without the sort of gear progression to match PVE content. Of course, now we have tournament realms set aside for serious business arena, which means normal arena will probably be left as a broken system, kinda like open ladder.
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