My suggestion #1
Instead of the typical judging categories:
Graphics
Gameplay
Sounds
Blah blah
Make it look similar to this:
Composition (How effective the objects, effects, and lights are used, even if no details are applied)
Creativity (How creative the designs of the monsters, enemies or characters are)
Plot (If the story and/or missions are twisted and well-balanced)
Environment (If the places were designed in a creepy/horrific way in both visuals and gameplay)
Sounds (Of course... On how effective the sounds and music were used to scare the player)
In this way, it won't be judged by quality, but rather by creativity...
The downside of this is that the judges should be creative and artistic...
My suggestion #2
As for judging... The participants are the ones who will judge and pick games by 1st, 2nd, and 3rd place, excluding their own game to their list of course. Participants who will not judge will have his/her game removed.
It's pretty similar to some competition rules I saw... (Like 3dtotal)
My suggestion #3
How long the game was played. Longer time = player is scared.
Not effective to some genres though...
I'll probably join this...
And yes, no easteregg this time! LOL