As wacky as this all sounds it's definitely not the worst possible outcome. Megalomaniacs ruling over tribes, kingdoms and nation states have been throwing their people into bloody wars since the dawn of time.

If America and China are dead set on having another dick measuring contest, we're all much better off if they do it with drones halfway between here and the moon, instead of near earthbound population centers. By all means let's make outer space the future of war, as far away from humans as possible.

That should also help with the post battle debris situation - most lunar orbits are inherently unstable, so any debris should auto clean in a relatively short while, unlike with many important Earth orbits where stuff might stay up for millenia due atmospheric drag being just too low.