I guess that it also comes down to the purpose for which you are entering the contest. I do very much get the impression that some of the parents in talent search, for instance, went out of their way to have their kids enroll at the level at which they could place highly. I can see that making sense if the purpose of entering is to "win" or use the scores for something like a DYS application.
OTOH, if the purpose of entering is to be challenged or to learn, then going the route of placing the child at a level where s/he would be less competitive to take top honors makes sense.
