If the host is to live IC, then they had best have some method other than "extreme life force" to do so. Even if the challenger wants them alive for nefarious reasons after the extraction, there might as well be an IC method for that. Who is going to go around verifying that? Don't look at me, I aint got the time.
Just saying "host can live anyways" after losing the tailed beast IC is kind of silly imho. If you want to do the RP route, might as well take the limb with it.
Regarding the judge thing, I would strongly advise against having more than one judge, or at least having an odd number of judges. Even if they can't agree on one, then a compromise of another sort has to be made. If two judges make conflicting statements, then the cloud just got confusing again, and we're back to square two of this mess.
If they can't come to a decision on a judge, then they must not want to fight each other bad enough. That's the way I see it. I do see, however, that that could give judge picking powers a bit more to the host in an OOC fight, but picking more than one judge, and it being an even number of judges at that, is asking for trouble.