A large single section tournament usually uses "accelerated pairings" in the first two rounds. Essentially, the field is subdivided into several sections, and the pairings are made within those sections. Not much different from having separate sections for different classes. One purpose of the accelerated pairings is to have the high-rated participants play among themselves rather than play the masses.
Does the prize reduction for unrated really need to be so severe?
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a truly anti-sandbagging tournament is to just have one section, like at the upcoming US Open outside of Portland Oregon. Everyone gets shoved into one big gigantic section. Kind of a cool concept actually, where a 1700 can get to play a GM like Nakamura in the 1st round.
Interesting concept, but not much incentive for true lower ranked players to get involved since they know they will be destroyed. As much fun as playing the #1 ranked U.S. player may be, it wouldn't be worth paying a chunk of money and travel and hotel to do so.