Here are some excerpts from Blizzard's Mists of Pandaria live developer chat that took place this evening (10/27). The following blue responses are the ones related to the upcoming Pet Battle System. If you want a recap of the entire chat, then WoWHead has a transcript available on their blog.
“With MoP you're introducing the pet battles. Will that be a new way of earning XP and/or valor points?”
Quote from Mumper
We are hoping to implement XP gain for pet battles in a similar way to what players see with gathering professions now. You would not want to level your entire character just on pet battles, but we do think you should be rewarded for participating in it.
“Will pet battles be created the same way as duels?”
Quote from Mumper
We will let players duel other players that are near them in the world, but we will also have a queuing system you can join to fight against other pet trainers of similar level.
“Will there be a system where you can turn pet battles on/off at will? Sometimes I don't want to be pestered by obnoxious pet owners that constantly want to duel. Or perhaps I don't want to get a random encounter while trying to get anywhere. Anyways, will there be an option to switch pet battles off temporarily?”
Quote from Mumper
We will have an option to disable invites to pet battles. Similar to what we have for player duels.
“There seemed to be a bit of a backlash at BlizzCon against the idea of counters in the Pet Battle System. An example would be a water-based pet (Murloc) vs. a fire-based pet (Lil' Ragnaros). This makes the fighting seem a bit more intricate, but I can understand the desire to have Pet Battles be easier to approach. Is there any thought to more than one skill level?”
Quote from Zarhym
We intend to create a simple combat system with some engaging depth. We're still in the process hashing out the details. Suggestions are certainly welcome! 😉
“What will be the new cap for professions? Do you plan to create any new professions?”
Quote from Mumper
The new cap for professions is 600 and we are currently not planning to add a new profession. We are hoping that pet battles will offer a fun, new type of activity for players to do that offers an alternative to player power progression.
“Will there be any grasshoppers?”
Quote from Mumper
Yes! It actually just got checked into the game by the artists today! Going to be awesome to use in pet battles!
“Can other people watch the pets battle?”
Quote from Mumper
We are working really, really hard to have spectating for the pet battles. Trust me, we want it just as bad as you guys. Stay tuned.
There ya have it… A bit more news on the upcoming Pet Battle System. It just keeps sounding better and better doesn't it?! 😀