I'm for the concept of a lore project, but not so much on yours receiving the official seal of approval. This is basically trying to legitimize fanfiction into canon (which on basis of fanfic can be pretty bad.) A writing contest sounds fun though. Maybe the best stories become official lore?

On the topic of writing Splinterlands fanfic, it's crossed the mind a few times, but I think you have to go rather out of your way for the existing lore of Splinterlands. And I've yet to bother to do that.