This is probably a little speculative, but I’ve been thinking about the challenge events. My assumption is that when SGG came up with the idea, it was something like “Wouldn’t it be cool if everybody could compete against everybody else in a series of tough levels, and the best people get prizes? But since beginners can’t compete with old-timers there will have to be several leagues – we’ll just make one for 3-star heroes, one for 4-star heroes, and one for 5-star heroes”. The prizes that were selected were prizes that would likely be of interest for the groups in question (top prize probably gets somebody his first 4-star event hero in the first tier!).
Since then, alliance wars have shown up, so that all of the advanced players keep a large stable of lower-level heroes, and play in the lower tiers for the bragging rights of getting a high ranking in the tables. This is a completely valid way to play the game, and should be defended in any rebalancing.
However, if you’re in the target group who “should” be in the 3-star tier, you’re going to work your way through the levels, get the completion bonus (hopefully), and then see that you are sitting at an insanely low place in the tables and have no idea how much better you would have had to have been to move up in the rewards tier. For example, I earned a little over 300k points and was somewhere around 118,000th place in the recent pirates event. I wasn’t unhappy about getting through it and getting the reward, but the only goal that was visible to me was that the player in 100th place had over 400k points. It was patently obvious that I wasn’t going to get into that tier, and I had no idea what I might need to get into the top 50,000 and get a better reward. As a result, I saved my world energy and did nothing more in the event.
What if, instead of a pure ranking system, we had two systems running in parallel — a leaderboard with prizes for the first 1000 players or so, and a point-based board for the rest of the world. Obviously someone with access to the real data would have to see where the sensible breaks here are, but you could have something like <300,000 points gets a summon token, 300,000-325,000 gets a small gift package, 325,000-350,000 gets a large gift package, 350,00-375,000 gets the top prize. (The breaks are also probably different in the higher tiers.)
In the leaderboard, instead of extra prize packages, here you could give the avatars, perhaps with a marking of “1/19” to identify when it was won. These should probably be unique to the 3 tiers, so that bragging rights are maintained. For example: Top 1000 get a little badge in bronze, silver, or gold with the date of the event; Top 100 get a background for their avatar (cut out of the background from the fights) with the date inscribed on it; Top 10 get a mob avatar (piranha, lobster) or weaker hero (Lady Locke in the top tier) with the date; Best player on the tier gets a hero avatar (Peters, Boomer, Sargasso) with the date inscribed somewhere.
If the people at the top end really need more prize than that, throw in a couple of mats, but I don’t think the package has to be very big here — they are already getting top level rewards because of their score.
Obviously this would need more balancing from someone with access to the full data, but I think it would encourage the non-top players to put more effort into the event and have more fun (and coincidentally end up spending more 
).