I think you would get into trouble only allowing 8 kids per bracket. Some kids may have a better record than others, but they may have not beat anyone top notch wrestlers!
I think you should just try to put together a "Championship" calibur tournament with an open invite for all the top wrestlers, and make sure the coaches understand that beginner or less accomplished wrestlers should probably not attend this tournament, unless they are comfortable with getting torqued on. That would also create some easier tournamnets around the state for the less experienced wrestlers to have a legitmate chance of winning or placing at.