I've seen the bitmap to level trick used before, but most "normal" (not developed under severe time constraints) games would eventually have a level editor implemented alongside the game. Personally, I'd be more likely in this situation to implement it as a text file and edit it with emacs picture-mode.

I've also heard of some bitmap-as-data atrocities. A colleague who worked with an engine from a certain well known single player RPG described how bitmaps were used in that engine to control animation states. Like, if walking and getting hit, which animation takes priority. There are as many ways to implement that system as there are game developers. For some reason this developer elected to store those matrices as BMP files, and edit them using a paint program.

The bitmap as level trick is a great shortcut for prototyping and rapid development, perfect for this contest. But I can't imagine the thought process that led to using one for animation data.