The tournament should be the classic "piramid" way. Two players(teams, groups, I'll explain it further apart) compete, the winner goes to the next stage(?)
So now, we have to think about where and how will the tournament roll out. Don't think about the players' skills, rather, making the elements each other has at the begining are equal.
So... As if it was the Olympics: make different competitions. Battle in the plains, Battle in the hills, Battle in a mountain, Battle with a middle river, Battle in a random manner.
Make different pools, as the number of people participating increases, it will be harder to organize the games. Sort out people in a random manner (any ideas on how sort'em?) After there are four players left on each pool, they now should be mixed again and battle until the first, second, third and fourth of the mixed pools are left. The winners!
Create schedules for each battle in the tournament. Make them in a convenient manner. Not everyone is in the same time zone (Im traveling, and right now Im in Korea XD). We should decide the times after we decide the pools and clasifications of each player. Make them fill a format: game ID, email address, their schedule (when can they battle), which battle they want to compete in, blah blah, the basic data you need. With the info we gathered, we should be able to plan when will the battles will roll out.
Create different manners of a battle: individual, team, teams that represent different factions of the roleplayin section, etc etc.
About the game. The game should really be stable if we expect a lot of people. The refs should have like a purely red profile picture or a different text color in the game chat.
Guess that should cover the surface