Can you point me to sources in RPG books that indicate whether spellcasting is acceptable or not in competitions? Notably, the Topaz Championship. I have come to an impasse with a few people who disagree with my opinion that shugenja using spells to aid themselves in a tournament is inappropriate.

The topaz championship states it. Most competitions are about displaying your skills, not what the kami can do. Otherwise, every favorite would go with rank 5 shugenja to boost themselves up.