To determine the total cost of a spell, start with the mana cost or alternative cost you’re paying, add any cost increases, then apply any cost reductions (such as that of Mage Duel). Mage Duel’s mana value is always 3, no matter what the total cost to cast it was.

If the creature you control is an illegal target as Mage Duel tries to resolve, that creature won’t get +1/+2. If that creature is a legal target, but the one you don’t control isn’t, your creature will still get +1/+2. In both cases, no fight will happen and no creature will deal or be dealt damage.

You can’t cast Mage Duel unless you choose both a creature you control and a creature you don’t control as targets.