Acting, dancing, music etc. are very specific talents that can be developed through hard work, practice etc. etc. And even if the kid never gets beyond hideously bad, they may still garner an appreciation for the craft.
Also, these skills are not generally competitive beyond the audition for a seat or part.
Beauty contests are these competitive ventures in which the determining factors are so varied (and in some cases beyond the kid's control) that I can only imagine the games it plays with their heads.
I'll admit that I may be wrong, but I know the fashion industry and have had no little experience with models -- and let me tell you, they are not generally a well-adjusted bunch.
Pageants don't train girls to be models...they train them to be poised and lovely women. If you don't think it takes hard work, dedication and talent to be in these things...you are wrong.