I see no evidence to suggest that smaller stores won't keep getting kits just because they can't fit 32 people into the building.
Nor do I, but it could happen, and I don't think it helps foster a growing community.
In what way? It's a store championship, not a regional, how would removing a store from having a championship foster a growing community? In this case, that's 8 slots that wouldn't be available if they were denied a kit, those 8 slots aren't moving to another store, they'd just be gone.
Because if there is a limit on kits available, it would be more beneficial to be given to an area that can have more people attend then a small 8 person one. But that's if they do that, and if they are truly that limited. It's a lot of variables but something I personally know I would be careful of.