Good questions. The FAA unfortunately has been unhelpful in answering them. The only thing they've published is the regulation itself, without any detailed guidance. The general message seems to be that they don't want to box themselves in; instead they'd rather consider each case within it own context. Ultimately its up to an administrative law judge or other court to decide.

The responsibility for filing a NOTAM rests with the event organizers. They do get issued regularly for a host of reasons such as parachute jumping, air shows, balloon fests, construction cranes, laser light shows, etc. I would hope that model contests are also on this list?