Before I put a skills challenge in place at a retreat, I would really seriously ask myself ......
... Might a skills challenge this hurt the feelings of some? cause some to feel inadequate?
humiliated? embarrassed? intimidated? etc.
I would fear that it may set the stage for a not so friendly retreat.
Some ideas, but they may not be at all what you are looking for
..... definitely not way out there as you hinted!
Real Simple .... give the pieces to make a nine patch and see the variation in finished sizes that result!
They can then be put together as a quilt.
Four patches work better, as you can trim them to the smallest size and all will fit together in the end.
Harder .... pick a block and give them what they need to make the block.
Could even give the pieces with no pattern and see the different blocks that result.
Or the different placement of fabrics for the same block.
Could time people on doing specific skills?
How about a team effort .... so that no one person is singled out?
Everyone in each team has to do one of the things.
They don't know what is coming up, so while they can pick and choose as it is assigned,
the best for each person cannot be planned.
Some laughs can be had in the end. Though again, I fear there could be hurt feelings.