I guess to clarify all this...
Q- Can you drop MMR and not get ban?
A- Yes you are allowed to drop MMR.
Q- What is a normal MMR value you start with?
A- Normal value is 1500.
Q-What if I see someone MMR dropping?
A- Report it to Gm's via in-game ticket.
Q- Mentioned above, for MMR dropping team will not be eligible to get rewards, how does that work?
A- Any kind of MMR dropping can cause your team to be disbanded, that also means teams you have been in before and have dropped MMR to make new team.
Q-My MMR is high, but i want to help a friend in arenas to help him gear up, is it punishable?
A- No it's not, you are able to drop MMR to normal value and help your friend out.
Q-I see a team losing to a specific team quite a lot with barely any damage done or not any at all, is it MMR dropping?
A-It may be a wintrading, you should make a ticket for gm's to investigate the situation.
Q- I don't like the current way how arena system works, what can I do?
A- Next season there will be changes in arena system which are mentioned by Proterean in
http://forum.warmane.com/showthread.php?t=344729. You can also give your suggestions or ideas.
I think that's about it, if I missed something or said something wrong then my apologies.