At AN in previous years, you used to be able to email them, and ask them if the time of your skit was ok and why you needed it that long. But due to the large number of entries, they stick with the 60 seconds rule - and I think that's from when everyone is on stage, or including the prewritten stuff you give the MC (if you need something voiced over, not 'this is so and so from this series').
I don't think they were cutting the times down. It would seem like it, sometimes, but the people who run AN are very careful, and wouldn't do something like give someone 30 seconds if they said everyone has a minute. It wouldn't be fair. But if you reached that minute, well, then they dimmed lights and all that.
I think it would be really cute, too... I love labyrinth.