I think the best system you could come up with would work something like this:
PvP Season (I've suggested this before, but there was simply not enough interest for me to want to continue with it).
These are all just opinions/suggestions
*Anyone can enter.??Perhaps have a small (50k?) entry fee which are all collected and awarded to top-ranked people at the end of the "season."
*Item Restrictions: No Nemo/Dory.??Other than that, everything can be used.??Perhaps restrict fish entirely to possibly make people think about using potions???Not sure.??But don't take away potting in its entirety.??
*Point System.??This is more difficult.??You can either go with a complext point system (I have several that I have stolen/adapted from other games I play), or a basic W-L-T ranking and make the season a round-robin thing where everyone fights everyone else at some point.??
*Extended Time.??The whole reason this should be a season is because of the time it would take.??Each week assign X amount of matches (1-5?) that need to take place in a special PvP room.??Maybe make an NPC that can check for illegal items like the ToH one (but with different restrictions).??Have the people assigned to fight each week set up a time on the forums and arrange for a GM/someone to be there to record the results of the fight.??This way we're not trying to cram a whole tournament into one day (which is fine, but lots of people can't stay that whole time).??
*Match Limits.??5 or so minutes with a tie after that time.??Players may agree to draw or one may forfeit at any point.??
*Post current standings on the forums and, perhaps, in game.
EDIT: I have more ideas for this kind of system...but I don't know if there's enough interest to be worth working them all out.