I'd like to suggest a "square foot" or "sheet of paper" challenge, where entrants are given free reign to do whatever they want/can in a space of 12"x12" or 8/5"x11", either on a layout or as a stand alone diorama. Certain minimum standard could be set: for example, each entry must include a minimum of 8" of track, one structure, some vertical landscaping, etc. This would give almost unlimited opportunities for participation, could allow people who are inclined to try a different scale than what they're used to doing, and would be inclusive of those who may not have a layout going. This could be scaled down or up for people working in different scales (so an N scale 6"x6" challenge, an HO scale 12"x12" challenge, and an O scale 24"x24" challenge, more or less).
One thing I'd also like to throw out on the challenges is that they maybe be run not as contests. I know that there's something to be said for having a winner at the end of the challenge. On the other hand, a non-competitive challenge (where the "challenge" is the deadline and whatever rules are set up) might draw out more participants with a wider variety of skills. This, of course, is coming from the guy who pulled up second in the scratchbuild challenge....



This would be similar to the old Gauge parties (could those be resurrected?) but different in the sense that everyone is working on a project with similar basic parameters.
Just my .02.
-Joe