This Jam requires a good deal of acting "in the spirit of the Jam" as it is a completely new concept of running a Jam. You are correct with all your assumptions, except maybe the prepwork. The structure of the Jam is the theme. The chaotic joy of taking something someone has started and expanding/finishing/spinning it is what this is about. So if you produce a half finished game on day one, ppl might feel too constrained or maybe intimidated.
As far as I can see, it would be possible to submit multiple games on each day to increase "winning" chances. Not sure if that would be "in the spirit of the Jam" though.