Mary,
Boats: I waivered back and forth between you and your "office mate" on the boats that should be involved. A formula class at least so there are more than one manufacturer. Your "run what you brung" idea is more interesting but in a year or two would coalesce around a single boat that proves itself dominant (although this could happen with a formula class as well).
Format: Keep the cash out of it, especially if you're just collecting it from the competitors. There are sponsors that will help with the bills, especially if you have media coverage and the racers will race it for a trophy and the glory. It brings back the corinthian element.
Race to win?: Some do, but I bet at least half race to finish (that would be my measure of success).
Last thought: It would be a shame to lose the race as it is one of the few (only?) cat events to make it to the general sailing public's awareness and was ready to go mainstream in a sort of X games type fashion.