Hi, As a parent of an 8 and a 13 year old, I can say that I support the idea that 12+ do not need to qualify. They are fewer as they get older, many chess kids give up chess when they go to secondary school, and besides, at the age of 12+ you are more able to judge your own ability and decide whether to enter the Megafinal. This system works well for London Junior Chess Championships, where you can still see 90 kids in U10 after qualifying and only about 20 in U14. Also, the experience of playing stronger players and lose should not be embarrassing at all, it is great experience and it is up to us parents and teachers to encourage them.
However, the condition that 12+ still need to play at a qualifying event does not stand well with me. Neither of my sons' schools run a chess club, so they need to go and qualify at one of the other local qualifiers which can be generally more challenging compared to some schools. If my younger son plays at an event with many 12+ kids he might be unable to qualify at all. On the other hand, since the older kids need not qualify, his older brother won't be motivated to give his best or might decide to support younger ones by giving them easy wins or draws - which is something I wouldn't encourage either.
So my suggestion, same as Gopherit's, is either just run qualifying events only for up to U11 (as for London Junior Chess championships), or run separate events for U11 and 12+, where 12+ fight for a trophy but all qualify for the megafinal.