Indeed the Christmas Cutscene Competition were all in video format for the ease of viewing. It's quite easy to record a avi from the game with a bit of thought and software.
Wether the cutscene/movie is in pbo or avi/mpg/wmv/whatnot shouldn't make any difference for the author in the submission phase - in fact it's even less work for the author to submit it as pbo.. and since we're not looking for any fancy video effect tricks, just the ones you can do in OFP, pbo saves time, effort, bandwidth, ect. ect.
It could very well be that this ArmA themed TrackIR contest submissions, or best of them, will be handed out to the big public in video format after been reviewed by the judges. But I'm not saying yes or no to it, just a maybe. In any case I think we'll be seeing a lot more of this type, or competitions generally, in the future.