There are two types of awards in this competition.
The Innovation Award
is about developing new platforms and models of learning which can be applied across subjects - accordingly these represent a larger challenge and therefore a larger budget.
The Knowledge Networking Award
seems to be more about harnessing current technologies and platforms to facilitate dialog and activity around particular subjects. Because this is more about framing and less about development, the grants are smaller.
The above links provide examples of projects that fit into each category.
The MacArthur foundation has poured plenty of resources into learning initiatives, and i'm not under any illusions that it will be an easy task to come up with viable ideas. That said, in the past couple years, the foundation drastically shifted its priorities
and is aggressively looking for outside perspectives.
The web is still very young, and i think that there is plenty of opportunity for ideas to be put forward by ordinary people based on their own experiences navigating the networked world. This community, our community, has placed value in participation and engagement...maybe that can lead to something good.