I understand that this rule is meant to decrease spam, and I agree about “winning” not being a suitable reward. However, I also strongly believe that digital artwork should be an allowed prize.
In my opinion, allowing artwork as a prize would increase the number of contests by a reasonable margin. I’d also argue that in some cases, a contest winner would prefer artwork over another prize.
Is there really a difference between sending artwork via the internet, and shipping a piece of artwork? The way I see, it, they have the same result, only one is much cheaper, safer, faster, and generally less of a hassle.