I believe there is a Clone Wars comic about Mace Windu coming out soon that talks about the Jedi Order and many of them either not wanting to fight or losing faith in the Jedi Order and they do abandon them and join Dooku's forces. Obviously, they do not live through the clone wars and so while they disbanded, they did not live to see the birth of the Empire.
I also think a question to ask is that the Jedi are more about keeping the peace and preventing conflict. They are diplomats of a sort. The arena battle was to rescue their fellow Jedi, but it was also an act that brought about a war. Maybe they should've been more covert in their rescue attempt... I guess it wouldn't make for a good movie that way though. To start a war that ends up killing a lot of people for the lives of only a few does not seem very 'Jedi' like. You'd assume they would've known the consequences of their actions and sacrificed the few to save the many...