I voted for fest/fic battle because I think it will bring more participation than an exchange for ficathon that's drawing on a relatively small pool of writers.

Plus with a fic battle, you don't have to have a minimum fic length like you need in a fic exchange, so you're more likely to get more people participating who can write a drabble or ficlet as inspiration strikes but wouldn't be prepared to commit to a longer story that has to be delivered by a certain deadline.

Plus being much less stressful to run for you.... *g*

Thinking about it, I also really like what they do with femgenficathon, where you pick a number and get assigned a quote that you can use as inspiration (or not) for your story. Not sure how that might work for a Kate ficathon, but it's a nice format.