What Chrono said about a fight-server: I did a similar thing like bot match with tanks. There is an arena present with tanks. You are assigned to one tank. That tank provides you info over the battlefield with a "radar". Radar can detect other tanks. The input for the tank was forward, backward, left, right and shoot. You only have to write the AI.
I can say: DO IT! It's very fun .

I second Paul that you (or everyone) could provide graphics/sound. Goal is you MUST use 80% of them and make a game of choice out of it. This way you don't have to take care about the graphics/sound and could boost development time and have shorter cycles.

Next time I also would like that every judge has a mindset of the compo theme and not like "it's just another PC game". With this compo there where some comments like there is no option menu in-game (DUH, it's an arcade machine) and which button to press to insert a coin (does an arcade machine have that??). It's just a tip for the judges.
Be aware: I'm not referring to the graphics in this part.

Edit: about graphics - you can do a small compo who can make the best procedural generated tree or something...