I agree that healing with food is one of the biggest balance breakers, but actually, during the last few months this was not the crucial factor. I have observed a damage absorption of almost thousand hit points per hit (!!!) due to high quality armor, so physical attacks were effectively disabled. Thanks to Eonwinds effort to fix
task 5713, as well as the major impact of
task 5784 on weapon performance, I hope the situation is very different now.
Also, the initial idea of the champion's cup was to encourage teamwork and a common strategy, and I am convinced that with a good coordination of magical attacks it actually was and still is no problem to take out a cookie eater very effectively. It just requires people to work together and stack spell effects properly. The same goes for coordinated physical attacks, but those are really much harder to time.
Considering
task 2389, I perfectly agree that fixing food would be highly beneficial for game balance, as it also encourages the production of healing potions. On the other hand, this should really go in tandem with a proper implementation of relaxing sleep (There are lots of tasks discussing the problems, e.g. PS#3861, PS#867, PS#354, PS#4644).
And by the way, congratulations to Karnath, I think his demonstration of various magic effects at least made some eye candy for the spectators.