So everything that I have seen before with contests shows that it really doesn't matter how you do it. If you do a 5v5 then I would suggest setting up a scrim server and just set punishments for people that leave without a sub (would be unfair to teammates if not). If you did retakes I would base it off of specific things and just weigh them (ie. kills, hs, ext.); only problem with ranking system that is currently on there is that it rewards people that nolife the server no matter their skill, which is ok, but only to an extent. The only thing I wouldn't recommend is a 32 man casual... yes it lets more players in, but its really only fun for a short period of time. After a while you get sick of so many people.
Just a side no... vip slot priority would be a bad idea, it would just give vips an unfair advantage in a community competition.
edit: just a side note, no matter what you do, as long as it is original and thoughtful, people that enjoy the community will play the event (but adding a credit multiplier or event specific models would be a way to spice it up)