The ethics for a contest like this seem like they should be straightforward. Pull out all the stops, do everything to win, don't get caught.
At Caltech, however, there is an additional wrinkle. Our honor code is a very important part of student life. It states "No member of the Caltech community shall take unfair advantage of another member of the Caltech community." That may not sound like a lot, but it is near and dear to every Techer's heart. It means that we can get keys to buildings for after-hours work, we can take exams at home, we can work together on problem sets.
So, with this added wrinkle, how does a competitive contest with grades on the line work? My grade is not proportional to my product and the work that I've done, but rather to the difference between my product and the products of others. I then have an incentive to sabotage the other players, to raise my relative grade.
In this particular contest, the professor has adamantly encouraged us to use all the resources available to us. Calling in favors, asking for links from friends, etc. are all above board. Even getting advice from a professional SEO specialist is fine, as long as he or she does not implement it for the students.
At this point, then, we must question what an "unfair" advantage is. If a student's parents work as SEO specialists, that student probably has a deeper knowledge of the process coming in than an average undergrad could hope to learn in the whole contest. Is that fair? No. On the other hand, if one undergrad is smarter than another, is it fair for that student to spend the same 16-18 (or 20, or 24) hours a day working on their classwork that others do? Should they be required to knock off work early? Of course not.
For this contest, I happen to know that some student already have established web presences with popular websites and some have not. If the professor wanted it to be "fair," he could make a dummy sandbox and let us play around in that, with no a priori advantage. That seems like it would defeat the purpose of the assignment, which seems to be geared towards learning about the Internet as a whole, including the existing networks within it: a much more practical assignment than a theoretical sandbox would be.
The grading on this assignment is important to note. It is possible to get an A (50+10+30 = 90) simply by beating the TAs and turning in a good writeup. The additional points awarded for doing well are then "extra credit." While they do still affect grades, and could make up for a mistake on an earlier assignment, it somehow seems less vital that the contest be fair. It seems that, with a grading system like this, the contest can be unfair, while the assignment and the overall grading for the class stay fair.