Also, it's US only, because clearly Ludum Dare is an international event and only superior US citizens can get prizes for international events.
Seriously, that always bothers me. Whenever there's an international event or an international site holding a contest, over half of the times only US residents are eligible for prizes.
It's not US-only, that was just boilerplate that was left over from the rules for Kong's last contest.
The reason lots of contests are US-only is because legally speaking, it can be ridiculously complicated to work out the rules and restrictions in different countries regarding contests. It's not because they hate people everywhere else in the world.
As for the actual Kongregate contest being integrated with Ludum Dare, I have no idea why anyone is getting upset about it. It is a completely OPTIONAL contest that you can enter afterwards IF YOU WANT. How is it possibly a bad thing to give a few people some money IF THEY WANT IT for their game?
Just so people know, Kongregate hasn't paid the LD organizers anything, it's simply a thing they thought LD participants might be interested in.
And please don't give me any BS about this ruining the creative freedom of the jam or whatever. If you want "true creative freedom", don't sign up for a jam with a theme, judging criteria, voting, and a winner.
Ah, yes, I just noticed they just changed that. Glad this contest isn't US-exclusive like so many others. I know it's because of complicated business/legal reasons (same reason why most official anime streams are US-only as well), but it still sucks.
The argument against monetary prizes is that Ludum Dare would supposedly become too competitive due to them, whereas previously it was 'just for fun' so there'd be no reason to cheat and all that. Personally, I can't really agree with the latter view. With over 1400 entries and tons of people playing the #1 game, at this point just the fame of winning would be enough to make it truly competitive (and thus making some people want to cheat).
To be honest, I also look at the contest results competitively; it's somewhat of an indication of how awesome your game is, and I'd really like to make a game good enough to be in the top 10, just so I can know and say that I've made a Ludum Dare top 10 game. LD's gotten big enough for something like that to actually indicate something impressive.