In my opinion if someone's using AI to grade the submissions then anyone who games the AI in their submission is 100% blameless.
You can't say that you're going to hire the job candidate with the biggest hat, instead of the qualified one, and then get all bent out of shape when people "cheat" by showing up in big hats. They're literally fulfilling the new criteria that you set. If that puts your criteria in a bad light and gives an advantage to an less qualified person, that's on you.
Yes, but you have to think about how many random innocent people they can stuff in there who can't get out. You can't put a price on that.