Very interesting idea.
I think this could definitely be implemented once we have 100+ on the server at a time.
LIke you mentioned, maybe having an EventMod for the specific events, or Judges would probably need to be implemented.
The one think I see happening is if its a whole new world, lag might be an issue.

 

I'm going to fund the PVP Town with Siege/Assault in it, Somewhat like the video JM posted. I'd appreciate as many donations as possible, since its pretty expensive.