From what I've seen, the arguments against it are that a pro writer has demonstrated an ability to write and sell work at a professional level, and therefore it is unfair for that writer to compete for a fan award. It would be as if a ringer entered a contest designed for amateurs.

Things get even hazier in the Best Fan Artist and Best Artist categories. What is the dividing line between the two types of artists? Should there be one?

It's arguments like these that make the argument of what is the difference between science fiction and fantasy seem almost reasonable. :-)