The Cave of Ancestors as it stands now is like a super-barracks for the Amurites, in that it's highly useful, if not all that flavorful. Because it gives EXP and not say, free promotions, it's really just a fast-track to hordes of Wizards. While, as I said, this isn't really bad, it's not all that flavorful. I haven't played MC's mod, but that does sound like it's more along the lines of the Caves itself in the scenario, rather than a super-barracks. Another thing to note is that the silly thing can be built in every city - and that really detracts on a flavor level, from the importance of it.
The Balsaraphs get Arenas for every city which do something entirely different - they give EXP to just about everything, including slaves and workers, add happiness to the cities, and also are really handy to deal with psychopathic Freaks.
If you made the Cave of Ancestors a National Wonder so you could say, put it in the central part of an empire and sent your mages there, then set it up like so...
1) Cave Trial - Send your Arcane unit on a Trial in the Cave of Ancestors. The unit may die, or it may come out more open to the secrets of the arcane than ever before. The more mana types you control, the more likely it is your unit will survive unharmed.
Units which complete the Cave Trial are rewarded with a random (1-3) number of free promotions (not EXP, thus allowing even Archmages to take the Trial for benefits.) I'm unsure wether a unit should be allowed to take it multiple times, probably not for balance sake, unless you make it only one free promo. A Cave Trial could also have the random effect to rarely (again, more often if you control many mana types, maybe even moreso if you send in a higher EXP unit at the start, causing you to make a tactical choice of the unit's life versus the chance to get a unique promo) like Divine, Hero (maybe not, Hero is a pretty powerful promo for a random adept to luckily get), Twincast, Perfect Sight, and any number of odd Cave-only promotions, like a Spell Extension 3 or Potency II.
This would make the Caves different than an Arena, which the Balsph build in every city, and make the Amurites have more powerful and diverse mages, as opposed to just mages with a leg up on being tier two, but at the sacrifice of time and the possible loss of the mage.