This is why I don't attend hackathons anymore. At the bigger events, there's always bound to be controversy, cheaters, questionable criteria, etc.
Allegations of cheating are serious, but they shouldn't affect your enjoyment of the event unless your main purpose was the win the prize.
I don't know about you, but I enjoy winning, and I've won hackathons before. If I just wanted to build something with my hacker friends, I can do it any weekend I want.