I agree that unless you play the system (re: cheat), there is no real healthy competition.

The only way that I can see to make the tournament more fair is to eliminate win-trade possibility: by removing the human factor from our competitors.

As in, you can only challenge NPCs in the Gold Saucer sanctioned tourney.

I know... seems like a bummer, but it doesn't discourage player-based tournaments using alternate rewards, at least.