I am not an IP lawyer, and this is not legal advice, but isn’t there a risk that successfully placing HPMOR on the Hugo ballot for best novel could attract legal attention from JK Rowling and Co? They previously sued the HP Lexicon when it achieved a higher profile (although that situation included the factor of professional publication and compensation, which is not present here), so they’ve already shown that they’re not adverse to lawsuits in the right instance.
This year I'm a supporting member of WorldCon for the first time, and I noticed that the Hugo's have a category for Best Fan Writer ("Any person whose writing has appeared in semiprozines or fanzines or in generally available electronic media during 2010."). I do believe Harry Potter and the Methods of Rationality counts, and I plan on nominating it. Even making it onto the ballot will probably expose it to a wider audience. Is anyone else here a WorldCon member and thinking of nominating MoR?