score:5
Yes, it is. Winning a competition at an event like this does not qualify as work, however, as described below, you are allowed to receive certain types of payments as a visitor.
I can cite Appendix V: Immigration Rules for visitors, Paragraph 4.7 "Payment":
V 4.7 The applicant must not receive payment from a UK source for any activities undertaken in the UK, except for the following:
(a) reasonable expenses to cover the cost of their travel and subsistence, including fees for directors attending board-level meetings; or
(b) prize money; or
(c) billing a UK client for their time in the UK, where the applicantβs overseas employer is contracted to provide services to a UK company, and the majority of the contract work is carried out overseas. Payment must be lower than the amount of the applicantβs salary; or
(d) multi-national companies who, for administrative reasons, handle payment of their employeesβ salaries from the UK; or
(e) where the applicant is engaged in Permitted Paid Engagements (PPE) as listed at Appendix 4, provided the applicant holds a visa or leave to enter as a PPE visitor; or
(f) paid performances at a permit free festival as listed in Appendix 5.
Specifically points (a) and (b) for questions 2. and 3. in your OP.
As for question 1, while there is no explicit wording specifically for "hackathons", by themselves they fall into the category of "meetings, conferences, seminars, interviews" so you should have no problem entering the UK to attend one (bar the obvious checks the ECO and IO makes at the application and entry stages) and I can't see anything in the rules that would suggest otherwise.