I'm running masterwork 4j with DF 0.34.11 on Windows 7 and I'm using the Ironhand tileset.
The Colosseum is causing loyalty cascades seemingly at random; I've tried to find some rhyme or reason behind it but there doesn't seem to be any consistent patterns. HOWEVER I do have several possibly useful observations.
First, my setup. I station the dwarves I want to fight in the arena, lock the doors behind them, and then cancel their station order so they can activate the task at the garrison to spawn the desired creatures. Once the creatures spawn I give either a station order or a kill order, both seem to result in the dwarves attacking the spawned creatures.
OBSERVATIONS:
-The changeling sometimes disappears when the creatures spawn (I believe this is the desired effect), and sometimes the changeling does not disappear and is near instantly killed by the spawned creatures
-When the loyalty cascade ensues (which in my experience has been well over half the time) the teams that form don't follow a logic that I can determine; I've had squad vs squad, 2 from 1 squad and 1 from another against another group of 2 from one squad and 1 from the other, mages vs everyone else, and even had familiars kill their mage owners.
-In one test I sent an earth mage and a cleric with their respective familiars against Desert Creatures. The basilisk and unicorn turned on their masters after the first creature was struck dead. The unicorn and some desert creatures survived, and they did not fight among themselves. The unicorn only ever stabbed his wizard friends in the battle so somehow the creatures were not aggressive toward it despite the "Opposed to Life" flag.
-If I have my dwarfs run around like pussies for a couple seconds after the creatures are spawned before giving them their kill order loyalty cascades don't seem to happen afterward.
-The loyalty cascade never occurs until a dwarf strikes one of the spawned creatures, and usually doesn't start until the first creature death. It doesn't end when the fight is over either; half the time the survivors of the cascade are rebels to the rest of the force and go on a murder spree on all the poor peasants. It seems the first dwarf to strike another dwarf is doing so for the good of the fort, though I will have to do some more testing to determine if this is the case.
-Spawned creatures occasionally loyalty-cascade among themselves as well. My latest cave creature fight started with an umber hulk attacking the dorf who activated the arena, at which point a green devourer immediately turned on him. Before any of my dorfs were issued any orders to attack some creatures were fighting among themselves. The hulk and the dorf therefore had to be considered part of the same team in someway at spawn.
-My wizdorfs refuse to cast their spells. While I appreciate the effort, my ever faithful level 3 Geomancer, you will never bludgeon that grimeling to death with your staff and I got about 40 combat pages of evidence to back that up.
I believe I have determined the underlying cause based on these observations: despite being opposed to life, spawned creatures are still considered to be part of an allied civilization.
The "Opposed to Life" tag only seems to set everything that isn't in the same civilization as a target. Other creatures treat opposed to life creatures no differently, meaning. If a creature from an allied civilization (say a dwarven caravan guard) was marked as Opposed to Life it would still draw the ire of your fortress to attack him. However, if he were to attack someone first he would become fair game. This is consistent with the observation that delaying my kill order for a few seconds does not cause a loyalty cascade, as all spawned creatures have taken swings at my dorfs and become fair game. It also explains my familiars never attacking the arena creatures, though they are quite willing to gore my soldiers (note, this would mean Opposed to Life creatures don't attack pets from allied civs, possibly from neutral and enemy civs as well).
This annoyingly also prevents mages from being effective in the arena; they will not cast offensive spells (spell casting is dont automatically when a mage is aggro'd by an enemy creature, while issuing a kill order resuls in dwarves that use their magic missiles then bludgeon things with their staves) and their pets sit around doing nothing.
Spawned creatures need to be tagged as part of an opposing civilization (gobbos or frost trolls or w/e). This would prevent loyalty cascades, cause soldiers to aggro against the arena creatures the instant they spawn, and allow my mages to actually be useful so I can roleplay out my "Fellowship of the Ring vs Balrog and Friends" with a white mage who behaves properly. Also spawning all creatures at the same time can royally screw the dwarf who activated the spawn task; separating the spawns by just a few frames would allow the rest of the soldiers to close in, though I am not sure if this is possible with the modding tools available.
EDIT: I'll gladly dig through the masterwork files and make the fixes and upload them if I can figure out how to assign the arena creatures their own civ, or if I can assign them to another civ like warlock. This might cause warlocks to get pissed and invade you if you slay too many arena creatures though, I'm not clear on the factions mechanics.