Well, I think that HTC has the playability/realism setting balance just about right in the MA. As proof, look at how well they are doing with the MA.
If the CT was simply a more "realistic" (Not really any more realistic , but more difficult) version of the MA, I wouldn't fly there. Why would I? I don't think the "Slightly More Difficult Arena" would be very enticing to those choosing from the menu. If it's too much like the MA, folks will just go where the numbers are and the CT will be deserted.
If I remember right the Axis V. Allies arena was the really popular one in WB. THAT is what folks want in my estimation, and I can tell you that is the alternate arena I want. I don't want artificially difficult settings in there, although slightly more difficult ones seem to appeal to a small group. I want loosly historical Axis V. Allies setups were there are limited plane sets so I can see how my P47 does vs. 190's or vs. Ki67's and Zekes instead of VS. every WWII plane there is including other Allied birds. I think that is the appealing part of an alternate arena for most, drawing on my (wow has it been that long?) 5 years or so experience flying WB and AH and acting as a trainer in both at some point. (I first joined WB at version 1.01, flew for Gold and hooked up with The Flying Pigs.) I find that most folks really want to try out their favourite plane type versus it's historical opponents in various different situations, and that I think is what the CT needs to appeal to. Most people won't play an alternate areana ONLY for difficulty level, that's a red herring, and it's something only a small group enjoys in my estimation. Although slightly more difficult settings can sometimes encourage the type of more historical gameplay many folks are looking for, settings that cause other problems (like making it hard to find a fight) will only hurt the arena, and keep away those that are looking for a decent Axis vs. Allies combat arena.
Honestly, I think we have to do the EXACT OPPOSITE of what you propose. The CT needs to be almost the same as the MA in terms of difficulty settings, but offer different combat situations, perferrably in a loosly historical context. That's what I want, and I think it's what offers the best hope for a reasonably well populated alternative arena.