Several friends have now mentioned to me that whole-ward pinewood derbies are better. Nobody plans to win because there are too many cars. It's all about creativity in presentation, and watching the fun, and usually someone loses on purpose so no small child has to.
I really like that idea.
Another solution we thought of is to test different things. Yes, run races for quickness. But also run a distance race. Or a which runs the longest, not necessarily the fastest. And a "who goes up a hill best" race. And a race for going very straight and not veering off to one side or another. Or a race for which car floats best. Anything else besides speed just to change things up and point out that while some cars are great for speed, if you need them to float they might not work.
And also just patience with a stupid system. That's always good advice, especially when people are all volunteers who were assigned to do this, and they're doing the best they can.