Points should definately be scored by game outcomes; 1/0,5/0 for wins/draws/losses is the standard approach although 3/1/0 (the soccer system) is sometimes used to make people play to win (which I doubt is needed at this level).
The best system for a tournament like this is probably a swiss event. Since each section only has 105 minutes (which is REALLY low for a chess tournament) I'd suggest about 7 rounds of 5 minute games (which is 70 minutes and some time inbetween the games) if you have a decent number of players in each section. The swiss system scores players by match points (with a 1/0,5/0 system) and in the case of equal match points by OMW% (Opponent Match Win Percentage), which calculates how well all your opponents scored; this places those who played tougher opposition over those who played weak players.
This is my first time sponsoring a tournament at my college. I would like to find some one who can guide me in making this a successful event. The tournament is set for six hours in lenght, 11:am-1:pm for beginners, 1:pm-3:pm for intermediate,3:pm-4:45 pm for advanced speed play, then awards. Since the matches are time limited, should the players be scored by match outcomes or points by pieces taken. If anyone has a better solution please advise me. Thank you.