My team specifically does not give out Varsity letters. But our school works a bit differently than most. We give out Varsity letters along with a Varsity pin. If you gain Varsity status in another sport, you get a pin for that sport as well. If you are on Varsity for a sport at one point, you are considered Varsity for the rest of your seasons on the team and you get a service bar pin. With that said, maybe they could give out Varsity pins for robotics in the shape of a FIRST logo? My school also gives out the "Old English F" award, which is essentially an academic Varsity letter. It requires 85% attendance and GPA, as well as participation in 3 extra-curricular activities. Maybe something like that for robotics. For the idea of Varsity letters for regional winners, what if the gave out patches? They look like this:
http://www.sectionvsoccer.org/Images%5Cpatch2.gif
Maybe give these out to the top 2 or three seeded teams?