I completely agree with (modern days) Diomedes!
Make the teams 10 down to 7.
This way it's going to be less restrictive. A clan-less (button-mashing) hero might chose to go in a team of 3 or even 2 against a clan's 7. And that just makes it more spectacular and more flexible, considering that (some) people have real lives too. Or so I've heard some rumors...
It's more than twice as hard to get 8 people together at the same time than to get 4 together at the same time. And as the number increases, so does the ratio. But this flexible method will also allow large (or eager) clans to have 10 vs 10 battles, which will be fun. Moreover, it will be serious incentive to compete for the first n spots in your clan's team. For instance, mr. X is his clan's no.1 cavalry pick. And mademoiselle Y is her clan's no.3 shield-and-pick pick.
Pick?
About the item restrictions, however, it's a little more complicated, unfortunately.
The first idea I propose is a budget limit per team or per player. Better to be per team, though. And to try to enforce it and make things clear, every team must present the full list of items they spawn with at the beginning of the battle, so that the discrepancies between the list and the real action are easier to spot.
Poll