I don't know much about the history of the event, but I agree with you. Encouraging innovation has to be good for the Tybee and sailing in general.
What evidence backs up your claim that unlimited boat development is good for the event?
Don't we already have classes with rules that allow unlimited development? Why does the Tybee need to be the same way?
The best thing that happened to the event and insured it's survival is the current format. We already have a very small pool of sailors with the desire and wherewithal to get to the line and you want to make it an arms race?