I'm also all about encouraging instead of discouraging but I don't see how my suggestion would be discouraging members to report rule-breaking content and low-value post. The winner would still win quite a nice amount of valuable BTC for his reporting, something that didn't exist in previous years (before Bitcointalk had such yearly rewards) and even back then, we had quite some good reporters.
I could even argue, that implementing my suggestion would encourage more members to report spam because it's more likely for more members to get a part of the BTC-rewards cake.