...is exactly what we going to do with the whole forest right now.
There is difference between half-implementation and introduction. Also as I've explained in previous posts, general forest concept we've discussed already has a great deal of possibilities and functionality, it's more than enough for 1.0...
We cannot. Without AP you can't do anything. AP can be restored in brothel only, since spending the night in outside of the city is not gonna be there before 1.0.
Challenging? Yes. Dangerous? Only if we won't have "run" option within BE at all.
Yes we can. Single AP cost of 3/4 points per team-member at a single attempt/fail at a quest. Simple, clean and clear.
We don't have a run option so if adding it will hurt the game, we'll simply leave it out. Also as I've said, there is no certainty about modding the BE before 1.0. I even enjoyed the simple battle option in Otherworld (original release)... what we have now is better and more entertaining.
Looks like a concept of arena rather than forest exploration: continuous fights to unlock the next level while standing still. Imagine 20-30 battles in a row on the same screen without elements of real exploration, for example finding a chest with goods, a random cave, or even simply moving somewhere. It will get bored very quickly.
Matter of opinion, as I've said above, even OW system didn't get boring quickly (And I missed after it was taken off the game), not mentioning our mobs have 280 different items and gold to "drop"

Powering up is addicting, not the battle format.
What's the difference between the arena and the dungeon?
In dungeon you are on your own, for example if you low on health, don't have healing items and spells anymore and too far from the exit, well, it probably means that you are not well enough prepared, and time to pay for it or load the game. No middle ground.
Already addressed that in previous post. There are plenty of great games where returning to safety is a given from any place/dungeon/location. A very solid "middleground" and different approaches that have been proven to work out perfectly are available, at least to me.
At arena you have to defeat one or several enemy waves and claim your reward. Often you don't know how strong will be the next enemy, but after each wave or several waves you can exit if you want to and instantly get to safety.
That is one of the possibilities for Arena and bit different from what I proposed.
In dungeon you have freedom of movement, including the possibility of getting lost in some cases. At arena you mostly stand on the spot, and enemies are coming to you.
That could work if BE we used was similar to tactic rpg. But it's not, it's a classic jrpg engine.
One again, somewhat different concept for the Arena than mine and we were talking about basic exploration in the forest, not a dungeon and even as I've said above, there are different approaches to both available. I can see our BE format working out just fine.
And what do we do when there will be a real arena?
Reputation/fame requirement to participate and pick better opponents, some warrior girls/NPCs in the game chosen to participate (and dedicate themselves to Arena) before you might even meet them (fighting each other without your knowledge as part of city "life" simulation), prices of gold, not items, ladder of 20 -40 top "gladiators", tournament every 40 - 60 days. It's a system that's structured very differently and you need to "set up" matches before you fight them as Arena suggest spectators, planning.
Indeed. I proposed earlier to create an arena for 1.0 instead of forest and other dungeons, but you refused. Now you trying to make a forest similar to arena, except for the scenery
It's so dissimilar in my mind that I find it very hard to comment on this... It's like saying that Spain and Somalia are similar except for a couple of minor "issues" while having a discussion about where to go on vacation... both have beaches, people, maybe even food?