Thing is, Pokemon aren't real street fighters. -_- That would be cockfighting.
Pokemon + street fighters = lol
EDIT: Damn you Chris.
Reason for that is, sending a Pokemon out to battle alone is dangerous, the "trainer" has no part in the battle, and that could lead to the Pokemon fighting each other to the death; caused by not knowing when to stop. The main point of Pokemon battling is the trainer and Pokemon battling side-by-side together in order to concur a battle. Your idea totally ruins the concept (though, if they adapted the Battle Palace correctly, it would've been okay since the battles would be monitored and it puts the trainers' trust in their Pokemon to the test - stated in the game).