Oh, wait, I think Schneier answered that:
Contests are a terrible way to demonstrate security. A product/system/protocol/algorithm that has survived a contest unbroken is not obviously more trustworthy than one that has not been the subject of a contest. The best products/systems/protocols/algorithms available today have not been the subjects of any contests, and probably never will be. Contests generally don't produce useful data. There are three basic reasons why this is so.
They are:
1. The contests are generally unfair.
2. The analysis is not controlled.
3. Contest prizes are rarely good incentives.
I'd submit that (1) doesn't count here, because the idea you're demonstrating is so obviously flawed that contestants aren't at any disadvantage. But (2) and (3) are absolutely valid here: there's no structure to the contest (it's a bunch of Hacker News people poking at a page at random with no collaboration, milestones, or test plans), and $1000 buys ~3 hours of cryptanalysis work if you source it from software security people instead of actual cryptographers (who bill north of $450/hr).
I have no idea who you are and so I don't want to sound like I'm offended by what you've posted. But you are like the 100th person to staple SJCL onto a web app and posit that they've created something more secure than a private wiki. Actual professional cryptographers have addressed similar claims in the past. Here's Nate Lawson:
http://rdist.root.org/2010/11/29/final-post-on-javascript-cr...
Instead of the brinksmanship of offering a contest, why don't you instead just listen to the arguments people are making and try to learn from them?
Triple bonus points for noting that AES and SHA3 were the products of design contests, after Schneier wrote this, and then observing the differences between those design contests and the one at the top of this thread.