@curious it is not installing the APK that teams are having trouble with, it's generating a filesystem image that flashes properly. I have, for example, created userdata.img files I can simg2img and then open, but that don't flash properly. I suspect permissions or some other modification that happens during the process, but most of the time it seems to just wipe /data when I flash userdata.img, probably a step it takes when the flashed image doesn't pass some checks, but I wouldn't know for sure because none of this has public documentation.
As for waiting, every team has their own circumstances, and I can tell you that our team (really mostly just me) with our limited resources would have been missing critical pieces of our solution had we had to stop and devote a month to becoming experts in reverse engineering the Pixel C tablet. I had believed, as XPRIZE has said, that they didn't want this competition to be about the filesystem imaging so I thought they would ensure that the process was one that any team could reasonably and reliably perform using documented processes. Not doing so, after all, could force smaller teams with less resources to have to choose between having a less competitive entry or risking not being able to submit. If numerous teams need to devote a month or more to figuring this process out, I don't think the process is reasonably simple or obvious, and it is clearly not documented, which, most likely, is completely intentional.
We had hoped that XPRIZE would either allow APK submission (which it even asked teams about in a survey) or, having partnered with Google on the Pixel C, would work with them to provide a set of instructions specific to that tablet for at least the common case of imaging a tablet with a simple APK installation. Or, alternatively, if Google does not want to share the process with teams, ask Google to provide XPRIZE with an automated process for taking an APK and outputting a filesystem image in order to keep that knowledge internal to XPRIZE and Google. None of those things has happened, and despite asking about it I have not yet heard any clear response as to why. If XPRIZE really wants to ensure this competition isn't about generating filesystem images, though, that would be the way to do it.
Also, regarding Marshmallow, I did recently discover a possible reason why some teams are having troubles preventing the automatic upgrading. It had been a while since I flashed a stock tablet, but when I finally did it again yesterday I found that a stock tablet does indeed force the upgrade to Nougat. However, I discovered that if you do the oem unlock, then do the fastboot oem unlock step, and then flash back to Marshmallow, then right after the wifi connection is verified, if you hit the back button while it is 'checking for updates', it will stop the check and move on. At least, it works reliably for me in my tests when I flash the MXC89L images.