Stephen,
1) After the two qualifying games, the field is cut to a "bracket multiple" (16, 32, 64 etc.). In the case of the first tournament, the field was cut to 16 for single elimination match play.
2) I spoke to the tournament organizer and I will do my best to accurately convey his thoughts. Based on the nominal entry fee and number of entries, he wants to still have good payouts for the winners. If the number of entries increase for future tournaments, the prize ratio could reduce to 1 in 4.
This is a new undertaking for him and he is open to hearing ideas that could make the tournament better.
I hope you can make it to the next tournament on April 4th and bring some friends.
Take care,
Keith