I don't enter big comps either, but it would seem to me that any serious comp participant would have done a little research online among forums such as this prior to the comp and discovered what baits work for certain areas.
I've never fished the south island coasts but I'm pretty sure I could search around and find a little recent info on what baits are currently productive.

I don't think restricting types of bait would have much effect unless the organisers decided to forbid the use of the favourites..
It would also be very hard to police?

The other thing that comes to mind is the possibility of something new being discovered. For example, the news on this forum a while back that the biggest Kahawai caught in the Porangahau comp was caught on ox-heart or something similar. People experimenting with alternative baits can add valuable info to the 'surfcasting pool of knowledge' as long as that info is shared.

I think a pegged comp would end up being somewhat of a lottery unless the beach being used was the same all along (such as Marine Parade / Awatoto in Napier) Otherwise some contestant is going to land in the prime spot and catch the best fish, even though he/she might not be a very good angler. The very best anglers given a lousy location won't be able to catch fish that aren't there. A competition is about fishing skill, and unless you can provide a level playing field, pegging would remove a lot of that skill and replace it with luck..