I think this is a great idea. Some of my fondest experiences when I was a young-and-budding programmer were challenges of this sort. I remember two in-particular. One was a day-long programming contest I participated in in highschool. At the beginning of the contest we were given a game (in this case, it was battleship-like) and we had 4 hours to design and code a program to play it, then after lunch our programs were pitted against each-other with the best program winning. The other happened when I was in college. Everyone in my class had to write a program to solve a sliding-tile type puzzle. For grading all of our programs were given the same input and benchmarked and the one that solved it fastest got the highest grade.

My only concern is that a Perlmonks programming challenge like this could really burn up a lot of my free time :)

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The Seekers of Perl Wisdom posts where several monks post responses, and then someone benchmarks them seem to be popular. I think "write code to perform task X the fastest" challenges would be great and much easier to come up with "have program X and Y fight to the death" in a strategy type game contents. The ideas could be based on real problems.