I know this is an old, original "issue", but I just discovered it after making some platforms in my Antiquarian home just for target dummy practice. Anyway, this isn't so much as a complaint of the issue, but a suggested fix.

Ideally, every object should have target collision detection, but I'm sure that would demand tremendous effort. Although, this could also make placed objects block light, and could be used to great effect, especially if you could enable or disable it for specific objects. Dividers could block lights naturally, but you could still do "in the wall" light effects if you wanted (I tend to do this a lot). Of course, then you're adding a bunch more processing requirements for shadows, I'm guessing.

Anyway, instead of re-coding every craftable object in the game, simply add a, maybe 5m diameter, targetable "mesh" base to each target dummy. This would be a coding rework on what, a half dozen or so objects. I'm sure that would be doable by even their most novice designer/programmer.

While this wouldn't immediately allow creating complex dueling arenas, it would make guild hall designs decidedly more innovative for dummy work. And you could simply turn some dummies upside down with their bases flush to the floor for your arena. Expensive, but workable--although you may get spammed with a bunch of dps parses after the duel. While I'm throwing out the idea, make the meshes square. Not sure if that would be easier to do than circles, but would help the above arena idea to have more consistent targeting areas.