I love the idea! But didn't you guys kinda do this last year but without the belt?
Even though it was an open tournament you took all the upper wrestlers and put them in one bracket and all the C's and D's and put them in another. I say charge a flat rate and divide it up like you did last year. This way an "upper wrestler" don't just slide over to the other side and make for an easy week with a big 1st place. Some people seek medals vs. competition!

Charge a flat rate, say $20!
Have them send in their ranking!
You guys divide them up and make a champion bracket based on their rank!
That bracket wrestles for a belt.
It might even bring in more $$$ for your club that way!