One approach a quilt show chair might take is to appoint a small committee to meet and discuss the issue. Make sure that there is representation from all points of view. Some compromise will be necessary, but it is possible to give a little to everyone.
Our committee decided that the bed quilt categories would be open to all quilts and be organized by size.
To welcome more special quilts, we added the following categories.
ART QUILTS: These must be an original design by the quilt maker. These may utilize multiple techniques, include embellishments, thread painting, beading, painting on fabric, photography on fabric, etc.
HAND WORK: HAND quilted, embroidered, applique, etc. Over 50% must be hand work.
MACHINE WORK: Artistry of the machine quilting, machine embroidery, or machine applique. Over 50% must be machine work.
You can find many more approaches on the Internet by searching for "quilt show categories." Above all, keep your quilt show fun so everyone can enjoy it! And maybe someday we will add a category for "My Favorite Failure"!