That sounds good.

Or just letting people take a colored tag and password protect it for a while.

You would need to have 5+ members on the tag 5 mins after joining for the password protect to stay, until the tag has less than 5 members.

If you don't have 5 people, 5 mins after joining, then the password protection is removed.

You would also need to have 5 members join queue, every 5 minutes.
With these rules, people won't take tags with their alts, and keep everyone from getting in.

I'm not sure how you can create a temporary tag, then have the server remove it, after you leave the arena?