1 - High level players need to do a ridiculous amount of arenas to get capped. High level players... do not like.
2 - Players at a medium skill level find themselves pitted against group 1 from above. They lose more often. Medium skill players... do not like.
3 - Low level players are pitted against a lot of the above groups, and those 5 wins from before, instead of taking 20 games or so, they now take 50 to get 10 wins. Low level players... do not like.
The two changes, both to the unscaled rating and the lower amount given, oddly make it bad for every single person wanting to do arena.
The net result is arena becomes less desirable for everyone.