Hmm... This reminds me almost of a mix between preset contests and the old story-writing contest that took place a year or so ago.
Personally, I do like the idea of a character bio/story contest. It would put a little spotlight on some of the community's most beloved characters, and bring out some of the heartfelt stories kept behind them. Of course, there would have to be some parameters around the characters, like making sure they're character bios, rather than a user's personal bio mixed in with a character as an avatar. And, maybe there would be certain details that would be looked for in the bio, such as the character's history, their personality, and maybe even a little written-out short roleplay post within the bio, viewed from the character's eyes.
Throwing around ideas. ^^" I like it, though. If it catches on, I imagine it would be fun getting to see what kind of original characters might surface.