Painless death at the hands of other chickens sounds more moral than the current situation: a life of suffering followed by painful death at the hands of a machine. Of course if all chickens are born into a persistent vegetative state (or something close to it), I don't see how fights could happen. Also, farms where chickens kill each other would probably be less profitable than farms that slaughtered their chickens at the optimal time.

Painless animals were discussed on Overcoming Bias a few years ago: http://www.overcomingbias.com/2009/09/painless-meat.html . Interestingly, vegetarians were more likely to oppose painless animals than meat-eaters.