1. This is a sport where emphasis is placed on height as being a wanted/needed attribute, so yes, tall > short. Of course being tall doesn't exactly mean you're better at this particular sport. It's just an advantage.
2. I have no issue with non-Hmong athletes participating. For competitive individuals, you want to beat the best to be the best. As far as keeping with the spirit of the festival, if the Green team played by the rules, tough cookies to the competition.
Personally I can tell you beating a team with "ringers" feels much more satisfying though