David,
There are freeware fractal generators that work in 24-bit color - Chaos Pro is one I use - so spending money on UltraFractal or other commercial products isn't needed.
No, it's not. We've had submissions from free and commercial products.
I would be very very surprised if ANY image generated by Fractint was selected. A 256-color palette spread over that big an image? A 24-bit-color capable Fractint would be nice for that ...
I created several images with FractInt where I did the compositing in another program (you can use the GIMP if you would like a free one). This produced images well in excess of 256 colors. Also, there's no reason that a deliberately reduced-palette image could not be created (e.g. sepia-tone). It's an art contest. --Damien