The purpose of this is to suggest a PVP element to the game that may be interesting. Considering balancing ingame characters for pvp is difficult lets not use them.
People acquire base monster templates through some method (monster manual achievement?) These base templates are used to create a new character that is a monster that can only enter monster only explorer areas and gain experience in such areas. When someone reaches a certain level of experience with a template they can continue with the template or at some point can upgrade to a different type of monster template. For an example of template progression see below (just an idea).
Tiefling upgrades to
Barbezu, Orthon, Bezekira upgrades to rare templates
Pitfiend, Horned Devil, Abishai (Any color)
Certain template upgrades would have to be rare/limited I would suggest that the rare templates turn a monster character into permadeath. This is to prevent everyone from running around as a pitfiend. Gaining the rare/limited templates would require a rare item perhaps from killing that monster with your own monster in an explorer area.
Keep in mind that if i went from Tiefling to orthon, i have to restart (like a TR) at orthon. Same goes for the permadeath templates. I would expect a level 1 pitfiend to be quite a bit stronger than a level 1 bearded devil, he may get killed by 2-3 players of similar level.