You should play Hyper Dimensions (sp) for the SNES, its the best DBZ fighter out. Back on topic..
I had an idea like this a while ago, the only difference is that for the two involved it would be like a slow motion 2D fight where you can attack, dodge and counter depending on how powerful or how good you are, something that would involve more skill than power. If you could mix that with the Jedi Dueling system (i.e. you cant interfere during a fight) then I think it would be really.
Plus, I'd like to add on that that there could be a bar for each player to rate how much damage has been recieved and that, once the bar is full, the losing player would be pummeled by an animation of moves unique to each char. For example, Goku could punch someone backwards and appear in his path with Instant Transmission before smashing him into the ground. Or if you used Piccolo he could jump up and deliver a serious of kicks in rapid succesion before dropping down and extending his arm in a punch that carries the losing player a few meters away. Just examples though, there is lots you can do with it.