In one of my home campaigns we used the following contesting rules.
For friendly competition (that is for guilds to bid lower, for churches to
go out and preach and convert etc.), you used a different effect of the
contesting action. First time you contest you get exactly the same result
as in the Rulebook. The second time you contest (and make the roll) you can
add one to your holding level and subtract one from the holding you're
contesting (of course this works only when you're contesting your own kind
of holding).
The other option you will have is to contest as in the Rulebook, but we
transelated this to be a more violent kind of competition (burning of
warehouses, burning of temples etc.). Now this option also tended people in
the province to get angry (-1 loyalty), and when the ruler finds out that
some temples are taking it out on each other in his province he will
probably be less than pleased.

It works ;-)

Oyvind Gronnesby