Quite hilariously, I have been in a situation similar to this one.
So it was back when Isa and I fought for the 3 tails, before I knew I was going to be inactive of course. And I specifically added a stipulation stating that running meant forfeit of life, so technically maybe, you guys just don't go into the details necessary to accomplish your goals ;P Now, I have read through this thing, two or three times at this point and only see, that since, "It hasn't been done before, so it's obviously common knowledge that it cannot be done." or, "People are totally gonna abuse that." The basis of this argument are theories and assumptions at best. Shadow specifically stated at the start of this topic, that, (Gonna paraphrase) "I have been on sl for 10 years, and never have I seen this..." But let us consider a lot of the things we are doing now, the old RP'ers would be like, .----.
Look I ain't one to get on any soap boxes, nor would it be fitting of my character but in IC fights, it is generally okay to dip if shit gets sour. These rules weren't clarified to the fuggin extreme and he made an error that anyone who hasn't followed Bijuu fights for years would have done as well. The arguments I see, and I think someone else touched on this, is that since nobody else does it, it's general knowledge that it can't be done.
What I'm saying if you can't just use a space time jutsu to run away. If this were allowed, nobody with a teleportation jutsu would lose. Example being Dato and my fight currently. At one point, Dato goes to his Kamui dimension, using your logic, he could have just stayed there and I would have no chance at the biju. But instead, he simply preps there and comes back as he can't use that to escape.
I'm not saying you can't escape, but not through a method that is instant and gives your opponent no counter. If you had run away through normal means, such as distracting shadow and running by foot or other means a considerable distance away I'd have MAYBE accepted it.
It is just simply not fair to biju challengers for their opponent to leave instantly after spending lots of time on the zone fight/ waiting for a challenge/ finding you have the beast in rp.
If the issue wasn't that he ran away, but how he ran, then he should at least be able to edit his post so that he literally just turns on a dime and dips after getting out of the Genjutsu. Lock him into the fact that his mind is made up on running, but change how he does it. I dunno, just seems like an unfair way to end a fight.