Ya, I'm convinced that dividing the contest into tiers will do jack. Why you may ask?
Well, I actually have a real life experience that supports this. *fart*
Not long ago I did a contest with great prizes. (When all was said and done it cost about $100) I even specified that skill would not play a factor in my judging because as the one running the contest I could judge based on factors I deemed fit to the contest. I even encouraged new artists or people who viewed themselves as new to art.
Bottom line was, I had a low turn out anyway. I believe I had 7 entries, all of which were from artists I had never heard of.
So I think people are just not interested in contests. The "skilled" artists who compete in these contests certainly do not scare contestants away. I think that's pretentious for an artist to believe that to be the case. And, if someone isn't an artist , I think they are misinformed to believe this.
So, Johnny seems to be onto something. Artists do these competitions for whatever fun they can get out of it, and for some reason contests just aren't as fun as they used to be right now to the members of NewGrounds.
There's my two cents.