I would always try to resolve powers like cards in Yu gi oh where effects triggering each other stack up in a list and then resolve in reverse order
ie in the somewhat extreme case gain 5 damage -> whenever someone gains damage cancel it -> whenever gaining damage is countered heal for 50 and cancel the cancel -> when a cancel is cancelled cancel all cancelling effects
would first cancel all cancelling effects, then try to cancel and fail and still gain 50 hp, then fail to cancel the damage gain, then successfully gain 5 damage
If people make powers that create an infinite chain of responses I'd have to consider it on an individual basis.
You're definitely right though, and what constitutes two powers instead of one is rather blurry. I think I might go on the principle that it's one power if it's thematically connected, so people could string 3 effects into one 'explosive gas, growing larger and gaining hp' but of course everyone is free to call them out on it and veto.
I'm thinking anything that overrides the default gameplay / changes the field / manipulates how another player acts should be discouraged because it could easily be unfun, and perhaps I'll automatically give it one veto as many vetos as the round number (half if 6 people) to discourage the freedom to change the arena as a 'gotcha' against someone else. The arena being a canvas would feel more free, but a lot of freedom in making powers relies on there being some established rules to build around so changing them significantly kinda pulls everyone else away from how they were using their freedom.
Oh for your specific example hmm.
"Everyone attacks one random target" & "everyone attacks these 3 players only."
Well if they're both globals then there's not really a first and a second in the order so my plan is kinda ruined. Huh.
I can't resolve it with chance because chance is banned lol. I suppose I could assign a round priority number for these scenarios. Either early round overrides late or late can override early. Wait no that doesn't even work because the could be posted on the same turn. Euuugh.
I will create an ambient power permanently in play and unoverrideable.
The Arena is your canvas (but your canvas is a mere canvas, and it too can be hurt):
Players nominate powers before the battle starts and then fight to the death. In the event that two powers conflict such that neither can be said to over ride the other (most likely due to infinite recursion or no establishable first and second) both powers are cancelled for the round. If the powers will cancel each round and one power was posted on a different round number to the other, then the newer power is disabled and the old remains.