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I entered the world of rpg's under the tutelage of a friend of mine, who was our GM. He taught me how to bend characters until they break the world. I watched him do it. I did it. And then, as years passed, I realized it was more fun to play characters with real flaws and setbacks instead of the Superman version of whatever class. Role-playing and storytelling is very important to me and my rpg experience.
This is not the game, however. This is a game design competition. As Sean K. Reynolds posted elsewhere, it is much easier to teach people how to write stories than it is to teach them the rule mechanics. Much of the RPGSS is geared towards the mechanics side of things to test us on that, and less so on the storytelling.
As you said, sometimes the item is cool because of someone else. Awesome, I totally agree. But then you are taking away some of the cool of the item itself and putting it on the person. And this first round isn't about the person, it's about the item. So make an item that's cool regardless of who else has worn it or even who made it.
The type of item you are discussing is more of a Maguffin than a standard Wondrous Item. It has backstory, it has flair, it is unique. The wondrous items for the competition are supposed to be more standard, run of the mill, can-be-played-in-any-setting-not-just-mine. For these type of items, a backstory isn't necessary, and players don't really care who created or wore such-and-such item 500 years before Aroden's death when they're buying standard equipment for their character.
The roleplaying is certainly more important than the item, but the rp is also the realm of the GM, not the item. The GM should tell the story, not the item's blurb in the book.