Just my 2 cents, but we are talking time zone challenge. That covers a large geographical area. If only 40 people sign up. That wouldn't even be enough to potentially fill 1 person per state. Its always going to be unbalanced in this regard whether you consider population densities or not. We would need to recruit in the upwards of 500+ people to narrow down the potential gaps in time zones. With numbers like 10 people per team, 1 person can offset the entire competition alone. With 100+ people per team, that number begins to diminish.
I don't feel it is productive to penalize, or not count every folding point due to unbalance issues as it is counter productive to the ultimate goal of folding. Yea it sucks to lose (I am part of the mountain team), but as I have mentioned before, a contest on this large of a scale with a very limited contestant pool, we will run into these issues.
Even if your team doesn't win, you are still a winner. Its about who you are helping when you fold. Its not about yourself. Its a donation. As with anything, you can donate a few cans of canned food to a food drive, or an extremely wealthy person can donate $1,000,000 to the same organization leaving everyone else feeling like their donation is useless. On the other end of the fence, even 1 can of food can make a difference in ones life, even if it is only for a day. The same concept translates into folding.
I completely understand that competition gives people more drive and motivation to fold the most they can. So its more fun to feel like you have a chance. But then again, a completely balanced competition isn't necessarily fun either.