After reading through the thoughts posted here, I wonder if perhaps the developers could do one of two things.
1) After the flag square has been selected, a staging ground could be established. This would be an area where armies from different players could be housed without coming into conflict with each other. At the start of the tourney, they could sally forth when commanded. This eliminates the distance problem.
1.5) The staging area could also be used to establish predetermined limits on army size. For instance, the organizer might decide each competitor could use no more than 10,000 units. The make-up of that army would be up to the competitor, but the total number of units could not exceed the cap set by the organizer. The competitor would also decide at what point to send units out along with what type of units and how many.
2) The developers could establish a dedicated arena for these tourneys. When a player signs up to compete, she creates her army for the tourney, and it is magically transported to the arena. Each competitor would start from a different square at the edge of the area, thereby ensuring an equidistant starting distance for all. This would also help eliminate long travel times to the tourney site.
2.5) I think this could also be modified to set army size limits if desired, and to determine when and how many reinforcements could be sent to the arena.