When I compete, I don't like to wear my competition outfit before craftsmanship judging. I'm too afraid of things getting broken or dirty. One year, a couple people in my group wanted to go to a photoshoot/meetup either Thursday or Friday night, and I was convinced they were going to ruin their stuff before judging (in my defense, it included the member of the group who was the most likely to spill or trip or otherwise have an accidental costume disaster, and she was wearing white). So I don't wear things before judging just to save myself the stress.
I've never encountered the "don't wear your competition outfit the rest of the con" rule, but I remember watching masquerades and just being floored when I saw some of the awesome stuff that came onstage for the first time. These tended to be the big, elaborate stuff that are totally impractical for daytime hallway wearing, though.
If you're competing onstage to show off the outfit, I think the revelation is important. If you're competing for a skit, the outfits often take a secondary place to the content of your presentation, and it seems more okay to wear them beforehand.
I'm only a little crazy. Really.