This sounds like a fun idea and could turn out to be very exciting. After some brief thought I came up with a rough draft method of accomplishing this.
How many teams
Each Regional would be given one entry (entry could be one robot or one alliance) to the "Grady Cup" for every 30 teams in attendance. This would guarantee every regional at least 1 representative and mega regionals (like the Canadian one) would not be under-represented.
Choosing the teams
The representing team(s) from each regional should be chosen by their peers with guidlines saying that whomever is chosen must have made it at least to the quarter-finals.
Where
If this event were to take place I agree with Dave Campbell that it should rotate every year to a new location. The offseason events would be a good option since the competition structure is already in place.
There would be many details to work out (e.g. Can team afford to make another comp. trip?). Maybe Andy already has a plan in the works
. Just my thoughts...