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I can't honestly see any reason why it would use any extra memory (unless the mobs are lopping off each others limbs or something), although it would certainly use a little more cpu time.
The main problem I see is not one of resources, but of game balance. Unless you plan the area very carefully, the mobs would constantly wipe each other out and there would be nothing left for the players to kill. In addition, players would be able to use mobs as tanks, and mobs might end up stealing kills, both of which are side affects you probably won't want.
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