Just sharing my views:
1) Regarding the clause about free use of your submitted photos, organisers can state their T&C within some boundary (i.e. nothing illegal). If you join, that means you agree. If you don't agree, then you should not join. A lot of competition has this clause. For instance, the Mediacorp 70th anniversary Radio Jingle Competition states that Mediacorp can use all submitted songs without paying royalties to the songwriter, and no obligation to acknowledge the songwriter. Of course, as zaren mentioned in post #17, if your work is crap, organisers won't use it.
2) No image software allowed to alter photos? What about camera built-in features, e.g. some cams allow cropping, sepia/monotone effects?
3) The top prize is a P&S consumer digital camera, so I assume DSLR-users who join this competition are not for the prize but for experience and recognition.
I think it's safe to assume that this Photomarathon contest target audience is casual photographers with normal cameras having a day of fun. It's not a professional photographic competition, so the T&C is not very extensive.
4) If you are a 'semi-pro' wanting to take the opportunity of the event to have fun, take some fabulous photos, get freebies and yet not wanting to give-away your masterpieces to the organiser, then just sign-up, shoot, and not submit any photos lah! There is no clause stating that if you don't submit any photos, you will have to return your freebies or compensate!
Carry on, gentlemen!