These catch 22's have always been a kind of problem for me. I see it as a way for the company to get thousands of pictures for the price of 3 or 4 prizes. But I guess the bottom line is, if you don't care and you don't sell. It's a start =)
I won't submit though =)
There's another kind of contest that snagged me a while back. The top few winners got some cash or equipment, but lower-level winners would be selected for publication in a book. There might have even been a small entry fee, I do not recall. I submitted and was notified that my photo had been selected for publication. Of course I was excited, and I placed an order for the book. When it came I anxiously looked to find my photo, and there it was - all 1x1.5 inches of it! The book contains large reproductions of the few top winners and then literally hundreds if not thousands of thumbnail images for the others. The scam, of course, was that they got many naive photographers to spring for the book, and that's where they made their money.