I'm reaching out to the event organizer. I talked with them a month ago about it briefly, of course I wasn't aware of this issue...

Any suggestions on a middle-ground for the event? Rather than rain down condemnation on a company that's trying something with potential, they may be convinced to make the right changes and still get the engagement they want from the community.

The IP assignment seems a bit much. I wonder if it is common for "hackathons".

It is not. "You win! Now hand over all your property" is not the way they should be run.