I think it would be better if the teams were made up of people not in the same game. That would encourage diversity and creative arguments. If teams are simply made of teams that already exist, there would be no need for creativity because all the tactics have been done already.

Also, if team battles are an option, it must be decided whether recovery from KO means would be allowed. Can a healer-type character use a life spell? I don't see how it would be a big problem as long as items are off limits and characters only have access to their innately gained spells.

What is it they say about silence being golden?