Lex, I'm late replying so I don't know if you're still checking. I don't disagree (because your point is a good one), but I could argue another side to this. For people without other writing support in their lives, contests can give you a sense of whether you're making huge mistakes or if your unfinished mss has promise.

As an example, I recently had a contest judge point out something about my mss that was hugely eye-opening to me. It had never occurred to me a scene would be perceived that way, but her comment made complete sense and will affect the story going forward. She saved me a lot of revising. ;)