I'm assuming that the purpose of going for a Hugo is to get publicity and increased readership for HPMOR. If I'm mistaken-- possibly the point is that having a Hugo award is Really Cool-- then going for the win in a less important category would make sense.

I've been in fandom since the early seventies, and it seems to me that people talk about the Best Novel a lot more than Best Fan Writer.

I may be biased, but I think Fan Writing is very much a sub-culture within the sub-culture.

To be fair, even print sf is minuscule compared to tv, movies, and comics. From yet another angle, fanfic has become a huge thing by fannish standards, but I think it's something of a separate branch compared to the sort of fan writing (typically essays, I think, rather than fiction) which gets a Hugo.