Hopefully they could just have this set up around the normal shrines (non-instanced)
Doing anything in the existing over world results in having to deal with Housing, which complicates everything. I think the use of the word "instanced" is a bit misleading in this case. What we would do is recreate the world building at and around the shrine in a separate area free of housing. When the battle for the shrine took place, it would occur at this location. When a battle began the fighting would take place in this location and any participant would be free to join in the battle by whatever mechanic ends up getting you to the battle.
Does that make more sense?
