Just for anyone interested, you set "Battle Arena Mode" using
BTMD2 and the appropriate bit. You can do this for any battle, which is cool.

Bizarro Seph is oriented the wrong way here, since the final battle is supposed to be fought on either side by two parties with Seph pointing towards the "center", as far as I can remember:

Anyway, I'm wondering how they chained arena encounter types together. Once you defeat the first enemy, you get the "Keep goin' - Of course!/No way!" style interface. Interestingly, the forfeit you get with this interface, affects everyone, not just the one character (though Barret's immune to Small in the next pic). Unfortunately the next battle you get is erroneous, with everyone's favourite pyramids.

Defeat those and you get nothing, and you're stuck in battle.

Any clues? It could make for some interesting custom battle arena sets.