Good question.
What if:
They are the ones who settle issues concerning stripping of a host, as well as issuing warnings to challengers and hosts. Once they are alerted to an alleged violation of the rules by a participant, they would investigate and determine the outcome based on the set of rules we have created.
If a rule does not cover the specific situation, they are to discuss and decide an outcome. Then they are to bring that particular matter which we did not account for to our attention so that we may convene and craft a rule to be in place should that situation arise again. Their initial ruling and the finalized rule we craft need not agree. Their decision would stand for that one instance in the interest of expedience. Our crafting a rule to handle future instance would be to create a standard based on the opinions of a larger body of people than just the council, as this is how all the rules have been created. [Note: hosts were involved with making the rules but do not serve on the council, This keeps those who are most effected involved in the rule making process.] Certainly it may turn out that the council determination will be something we all agree upon and then may be adopted as THE rule for that situation without alteration.
If the vote goes that way, council members may not judge bijuu matches. If the vote turns out to be something else, then the council judging matches issues will be inserted in the list of duties as per the terms of the rule.
--> not really a power but an observation: So far most seem to agree that council members cannot be current hosts. Additionally, due to numbers of available participants to be upon the council, they need not have hosted a bijuu in the past but should be familiar with RP etiquette and Naruto lore/jutsu. I feel they should be rpers, but I do not suppose this is required if they are knowledgeable in the topic. You need not be able to do something in order to know how it works. Perhaps it is just me, but I think most people would be comfortable with them being an RPer. But this does not mean that a Naruto fan could not be knowledgeable enough to know his stuff and make a great council member. Just because of competent individual prefers to use their SL time to visit and level rather than to RP, does not mean they would be bad council members.