That's what he said?
Sorry I couldn't help myself.
Ok so you're asking a lot of questions here. I personally strive to finish the critique even if the story isn't working for me. But I suppose everyone is different. I do try to put myself in an steel-hearted editor's shoes and try to determine where I might reject a story. I think it's important for an author to know where a story isn't working for the reader. If several readers point to a section that isn't working then there's something to it.
I think it's been fairly rare that a story close to 17,000 words actually wins, though I'm sure it's possible. The thing is, it's an economy of words vs. story. Thus, a shorter story with the same impact will always beat out the longer one. If your story can be cut back, do it as much as you can. it will become stronger.
For the purpose of the contest, I try to keep mine under 10,000 words (which is still large) - though I'd like to be under 8,000 if I can. Remember that a judge or an editor has to read hundreds of stories in a short time. Reading something that's really long, he or she is going to be looking for reasons to dismiss it. Of course, this is always true, but I think it's more true with longer pieces. So if you're going to make it long, all of it better be damn good. Dave has mentioned that flash fiction also struggles a bit because it usually fails to be competitive with mid length short stories. It's hard to develop a setting, conflict, and characters as well as a story that's 4 or 5 thousand words long.