The magical armor is the arena raiment that you must wear. There is more of it in the cupboards/closets too. You can't sell the arena raiment, but it is better than any you can loot from your standard bandit. When you level the armor stats on the ones in the closet increase also.
That's true, I forgot about that.
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Additionally, there are axes, swords and maces in the racks which you can pick up and then sell to merchants. Alas, as you wrote, you cannot loot the other arena combatants. They drop some really cool weapons, but you cannot take any of it.
Yeah, that's what I meant. Terrible to have an Elven Longsword just lying there when you have just an iron one and not be able to pick it up.
I am in blood Stepp'd in so far, that, should I wade no more, Returning were as tedious as go o'er.
