I think most people are honest and would report accordingly. You will always have posers and sandbaggers, but as general rule it works. They have their reckoning on tournament days.
This is not for high end tournaments. Maybe for a tournament within a tournament. Rather than all the old guys skiing together, then kids together, then young guns, you set up divisions by handicap and create some fun competition. If nothing else it can help with seeding in the head to head events at local tournaments. As an added bonus you may not have all the drivers/judges in the same divisions.
Maybe it has nothing to do with tournaments at all, just a fun way to measure yourself and stoke some friendly competition.
Maybe a separate handicap list from the ranking list so you can still see your name in lights, with no impact on rankings.