Yep you pretty much narrowed it down to the general consensus.
About the IP format, personnally, knowing how time consuming terrain building can be, I probably wouldn't be able to submit several entries in a relatively short amount of time. I didn't want to enter IP6, 'cause I'm not sure I can paint that fast, at least not if you expect a decent result...
So, I'd prefer a "one shot" contest with several categories "specific theme, size, etc.." and no restrictions on building material (hirst art blocks, static grass etc..)
The contest should get people involved who do not ordinarily spend too much time on dioramas, elaborate bases or terrain pieces, so definitely small pieces like markers should be encouraged.
Also, in order for the folks at Wyrd to get something out of it, I'd suggest a theme like "Steamvictoriohorrorwestpunk" that could influence the making of the Malifaux game...
Any suggestions as to the name of the contest ?