I just do not think you guys are remembering the EC tunnel the way it really was... the same way people do nto seem to remember the 50s like they really were.
EC was a dump. You had to turn off auction (and OOC, because people were idiots) just to try to xp in the zone, before you gave it up. People did not kill Slate for fun, they killed him because people thought it was funny to train Slate to the tunnel, where he would happily slay the greater majority of the playerbase. All of the tricks you describe, charming pets, displaying spells... all were in the funny once category. The first time you saw it, it was neat. After that, you didn't even notice it anymore. Druids never could bind others in the tunnel, and very few bound themselves... the WC portal and SoW meant it wasn't even remotely nessicary.
The Bazaar had two failings, both cause by developer incompetetence and ego. The first was the lag, the second was the requirement to be logged in to sell, and to have to find the seller to buy. They wanted the higher logged in numbers to hide the fact their their actual playerbase was slipping. This caused the lag.
You want the perfect system? Put 10 vendors to sever as access points in the arena zone. Put two bankers on either side of the podium, a few guards to keep people from getting unrulely, and a Grand Auctioneer on the main podium, to give it an RP flavor. Maybe the GMs can take control of him when they want to do a game or something.
Going to the vendor opens a window with everyone's trade stachel items and their price. Sold itmes appear in inventory, money in the bank. This window has a 10% surcharge.
Players present in the area can work out undercutting. If the seller is online, you can message hima nd maybe he will meet you face to face to work a deal.
But really, what is the value in forcing the face to face? Sometimes you get a good deal because you frustrate another player so much he justs wants you to shut up? If I list somehting for 100pp, I WANT 100 PP. I do not want 99pp, if I wanted 99pp, I would have listed it for 99pp. I also do not want 4 rusty daggers and 80pp. I do not want to sell the 4 rusty daggers... I want the PP. If the rusty daggers will sell to NPC merchants, then go sell them, and bring me the PP when you are done. If the item sells before then, which is what all the deal makers are worried about, then I do not care, because I made my 100pp. Someone else, with cash, just got a new item. Yous till have your 80pp and 4 rusty daggers, and as an added benefit, I have not been subjected to your sob story about how you need what I had to sell to savew your dying mother's life. All I hear is your mother's life wasn't worth 100pp to you.
As for where to put the Arena, put it where it goes, off Starfall. Portal, no portal, the only people not able to get there from NP or Oggok are under level 20 and fairly unskilled, meaning the exact people with no PP and a boatload of rusty daggers to trade... the very people no one wants to deal with.
Now, if you do not want it full time, make the zone open from 4pm friday to 4 am monday, you pick the time zone. Or just leave it up full time. Put some slot machines or something else on the back wall and rip some more cash from the economy.
I know automation is exactly what you do not want to see. But with the level restrictions on weapons, there is even less of a long term market and much more an immeadiate, got to have it right now market for weapons. AUtomation is the only thing that provides it. Anything else is like a gift certificate... just like cash, but less effective. No automation is just like automation, but with unnessicary steps. Kind of like the DAoC system. You have a listing of every sold item at the door... but then you have to run for an hour and find the house of the seller to buy. Why?
If you are not going to have automation, then just screw it. Rip the vendors. People can sell on the forums, or in /Auc. Any other system is pointless.