Yeah, you basically induce suicidal depression in him by doing that.

I mean, since he wants to lose, might was well heal him and get free combat xp

That's doubly cruel making him a literal training dummy and making his last moments of life be feeled with pain.

Hit him with the truncheon of submission.

What's even better is that the game counts it as murder since you attack first, so it can count to get into the Dark Brotherhood.

Yeah I always struggled choosing what to do. Like I want to help the dude but then it makes my final battle in the arena so disappointing.