Being paid cash as an employee is actually not the issue on which this turns. Unpaid interns and even family members of all such parties would also be ineligible. But the specific clear conflict with the rules under which Dustin falls is their clause that "ANYONE INVOLVED in the distribution of promotional materials for IDG or LFL is ineligible for the promotion".
Dustin himself reported the original story about the contest, fully quoting IDG's press release before deciding to participate. And of course, he routinely does so on both TF.N and RS when doing his reporting. Pay is not a factor.
I think you might be taking the definition of "distribution" a little too far. By your definition anyone in the press, anyone that ever wrote a blog or did a podcast or, potentially, any one that quoted them during a forum discussion could possibly be disqualified. Now, if RS was an officially sponsored public relations firm for IDG and/or Lucasfilm then maybe that part of it would apply.
However, I think some of your other arguments still stand. If you work for a company that in some way is an affiliate of those running the contest, you might be out. That would seemingly include web sites that are affiliates, meaning you make money through sales when people click ad banners on your site. I also think OfficialPix would qualify.
But that part about distribution, no. I have my own blog but I don't have advertisement banners or any affiliate links on my site and I don't think I'd be counted out if I quoted their press release and discussed it.