Levels will play a huge roll in the Arena. After the first leveling set (1-4) ability levels and talents play a much larger roll. You will climb back up when you level your Heroes again.
I say this ploy from the developers is to hide the fact that top players get a huge advantage for the HB. They want us 99% people to fight over nickle and dimes while the 1% actually get the majority of the HB. :curse: