Sorry there is so much confusion, but this is a complicated thing, so I hope you'll bear with us. Some things are still being hammered out with the rules, and I'll try to keep you all informed in this thread and in the official rules.
1. We have discussed the matter of copyrighted materials, and we think it's probably okay if you use them, as long as you include some kind of disclaimer at the end saying that game assets are the property of their respective copyright holders, etc. Also, don't make fun of the games you are using. The publishers will probably not mind at all as long as we are acting in good faith and promoting their games while we also promote the website. This goes for game footage, game music, logos, advertising banners shown in screenshots of the website, etc. I am going to amend the official rules and contest announcement with this information today.
2. There are no hard time limits, but I think you will be hard pressed to create an effective commercial in less than thirty seconds or more than five minutes. Those are probably good rule-of-thumb boundaries.
3. You can make files larger than 1MB, but please don't attach them to your entry email. If your commercial is larger than 1MB, you need to host it on your own webspace and just include a link to it with your email and the other required information. This point is explained at least twice on the contest page, but I know there's a lot to read there and it can be easy to miss.
4. Again, your commercial can most definitely be animated, hand-drawn, 3D modeled, shot in live-action, whatever you want. If you plan to use live-action footage, keep in mind that this is a commercial, so you will probably want to stick to some kind of testimonial or using actors and a script, just like you would find in real commercials. We are not looking for the kinds of videos we had in last year's contest, with people showing us around their crazy Nintendo basements or destroying a brand new PS2. I hope that makes sense.
5. Yes, you may enter as many times as you wish (but don't send in straight duplicates, those will be thrown out). If you send in five good entries, you may have a higher chance of winning, if only because one of your entries may pique our interest whereas your other ones did not. However, I think we will stick to awarding the three prize packages to three different people, so you can't make a clean sweep.
6. Parodies are fine, but don't bash on a game or system. For instance, if you wanted to portray the PGC staff at E3 as a bunch of Pikmin running around gathering impressions, that's cool. But I don't think it would be a good idea to show Pikmin slaughtering each other, being crapped on by a giant dog, etc. You get my drift.