Letting the Controller and Guan Shanhai truly fight would definitely be unacceptable, the influence of a battle between two Immortals can be inferred from the fight between Immortal Jiuchong and the Controller, where the Extreme Northern Lands almost reverted to a sky full of stars.
The same goes for the Controller and Guan Shanhai. If these two Immortals were to fight, the entire Seek Dao Sect would be affected... oh, that's not right, before it could be affected, Yun Zhi would have sent them back.
However, suppressing the cultivation levels of prisoners and allowing them to move freely is a viable idea.
Take, for example, the Restraining Light Treasure Box of the Laurel Fairy Palace. Any cultivator within the box has their realm suppressed to the same level, and Fairy Eternity once possessed herself, using the Restraining Light Treasure Box to challenge the Sect Leaders of the Five Great Immortal Sects.