Most people don't have a use for items like coal as they could make charcoal or even rare items like diamonds (They would probably be able to buy diamond tools at that point) so they could trade it for a set cookie value instead.
I would have planned to be a command, you could get the message after winning "Hey you won KOTL! Dislike the item you got? Type /(command) to exchange it for cookies!"
How about just changing the KoTL prize into a random amount of cookies flat out instead of having to go through a command to change the coal/items into cookies?
I would have planned to be a command, you could get the message after winning "Hey you won KOTL! Dislike the item you got? Type /(command) to exchange it for cookies!"
Well it could be applied to the number of whatever item you get from KOTL say you win 8 coal it could ask if you would like to trade the 8 coal for cookies, presumably this wouldn't be hard because there is a message telling you what you won from KOTL.