This issue has been fairly discussed on the old forum. Without any official response from kick9/lilith.
Sadly it was on general discussion and not in the bugs section (here is the link http://forum.us.kick9.com/viewtopic.php ... cdd9f99bc3).
tl;dr: Basically if you put identical teams (equips, enchants) one being all 5* and the other 7*, against each other in arena... the team with lower stars win!
Also a lot of heroes being promoted to 7* are worse in performance than less * version!
I hope it gets more attention here now.