I've heard teams have won hackathons with 0 lines of code, which makes sense to me. Biz model+mockups+presentation (and if it seems technologically feasible) should beat the neatest app.
Just so I'm clear, you're saying a neat idea should beat a neat app?
Yes, but not just an idea. Assume each entry is scored with equal weight in terms of the business model, functionality, pitch and team. If functionality=0 (no working app) you may limit the maximum absolute score to 75, which may in fact be greater than any other entry. If it would advisable to purposely not make something that works would depend on the competition criteria.