It should include modeling too, not just skinning, other than that, I'm all for it.
I think it isn't nearly as much work to make a skin as it is to make a map though, so the prizes would be significantly lower and thus I think we maybe could hold a contest like this in the community without the involvement of TWI.
If you are willing to handle this, open a topic and ask for donations for the prices and have everyone list what they payed (can be physical stuff too, I guess. Like mousepads or something). Let players submit their skins in this thread then, set a deadline and say what percentage of the final prices the winners get. E.g. 50% for 1st place, 35% 2nd place and 15% and a snog for 3rd place. That way the artists can start before you collected everything and people who see high quality content trickle in might be more inclined to donate a buck or two as well. When the deadline comes, open another topic with a timed poll and let the community decide who won (or decide on your own or appoint a jury).
Would be pretty cool, actually.