Damn, that hidden battle arena is crazy for grinding. I stumbled upon it too late in my first run for it to really boost me(or I didn't notice because I was too far into it), but on this run I hit right after I got the fat dude. It's like a level every fight. It's crazy. You get like 20,000exp each fight which lasts about a minute. You don't get that much EXP for anything else. Had like a 10 minute fight with one of those giant dudes on the map. 14,000exp. I think I went from Level 15 to 30 in about a half an hour in that place, and only stopped because I was getting bored.
Unfortunately, it makes the campaign portions kind of trivial. I beat that Lightmaster thing at the act one in like three turns, LOL.