Checking loomed weapons would be easy - heirloom package makes it easily visible. But you simply can't quick-check for armours, those should be w/o restrictions.
And since the grind is a huge part of crpg, it shouldn't be STF characters only or just make different tournaments: a STF-no_loom tournament and a full_crpg tournament.
Grinding up to high level and then not being able to use your main char is bound to frustrate.
For starters I wouldn't go with a full 5vs5 or even 8vs8. The more people the more exhausting it is to enforce/check the rules. Let's have a few test runs with 2v2 or 3v3 first, simply to see if the rules we have to agree on at some point make sense and are enforceable. The whole point of official events is a fixed rule set which can be checked and enforced, everyone plays by the same rules. Coming up with rules that simply don't work practically while being in an event may give bad impressions. That's why 2 or 3 test events make sense from my point of view.
And Nessaj said I should do 'dis:
Applying :
Character name: Ninja_Molly_the_Hooligan
Ban history: None, Nada, Niente, Nothing, Rien, Nix!
Why you're applying: Cooties said so
Your region(NA/EU/etc.):EU
Edit: Try to get in contact with Tuetensuppe. He already made a few nice event arenas. Maybe let them get looked over by those mapper gurus. Invisible balconies for the crowd/specs were kinda cool but not a must tho.