The Rules seem unambiguous this time, but there is only potential confusion because they are different from HSL as their own Event system ranks participants. Only an Avatar's lower WINNING loots will be removed, not all the lower duplicates.
The difference is that in events, each participants is only listed *once* in a toplist. As the list is sorted by some sort of score (where the score is either total loot or the highest single loot), each participants can only be listed once.
Here the participants aren't listed one-by-one, but rather the combination participant+each loot.
Prizes will then be determined based on positions on the FRL, with the following limitations: no avatar may win more than one prize, and prizes will be selected in descending order (1st prize selected first, 2nd prize selected second, and so on). This will ensure that each avatar can only win a single prize. Any lower FRL positions for an avatar that wins a prize will be removed, resulting in all entries lower on the FRL list moving up one position.
The reason all lower loots are removed is:
a) So that noone can win more than once.
b) If you would just give one prize and not remove all other loots, then if someone who was at place 5 also would have been at place 50, the prize for place 50 would be in limbo.