For what it's worth -- probably not much, since very few of the Pups seem to care what any non-Pups think -- I think this is a terrific idea. (Which is why I suggested it back in May, when the Puppy Wars began).
Look, everybody likes to get an award. An attaboy, a tip of the hat, some recognition for their effort. Scientists like to win Nobel Prizes, journalists like to win Pulitzers, and the guys who work at Pep Boys like to win Employee of the Month. If you go back to the first Puppy posts, way back when, and scrape off all the stuff about SJWs and cliques and cabals, the bottom line complaint, the thing that triggered all the rage, is very simple and very human: "hey, no one is giving US any awards." The Pups and the writers and stories they liked were simply not being honored by the Hugos.
The thing is -- and given the hundreds and thousands of words that have been written about Puppygate, it is easy to lose sight of this -- the Hugo may be the oldest and most prestigious award in our genre, but it is NOT the only one, and has not been since, hmmm, the mid 60s, at least. That was when Damon Knight founded SFWA, and launched the Nebulas.
In an odd funhouse mirror sort of way, Damon Knight had the same issue with the Hugo Awards that the Puppies did. He thought they were going to the wrong stories. But Damon was coming from the other side; he wanted to make SF (not fantasy so much, he was never a fantasy fan, once said he's never read a book with a map in it) more literary. To this end he founded Milford, founded Clarion, taught Clarion for half a century, edited ORBIT (by far the most literary of the original anthologies)... and began the Nebulas. Damon felt that the Hugos, the fan award, too often went to popular works, whereas the Nebula would recognize more ambitious, experimental, and "writerly" books and stories. (It has not always worked that way, but never mind).
The Nebula was the first important rival to the Hugo, but it is by no means the only one. These days, we have more awards than I can count... and many of them started with the express purpose of recognizing a genre, subgenre, group of writers, or point of view not sufficiently honored by the Hugos, according to their founders.
Charles Brown started the LOCUS Award, and always insisted that it was more significant than the Hugo, since it had a larger voter base (originally just LOCUS subscribers, later expanded to include anyone who wants to send in a ballot). For a time Charlie presented the LOCUS Awards at Dragoncon, in fact... but no one at Dragoncon seemed to give two shits (the turnout was always much bigger for the Bettie Page Lookalike Contest), so he finally moved the presentation to Westercon.
Lin Carter felt that epic fantasy and sword & sorcery were being ignored by the Hugo voters, and founded the Gandalf Award. His original intent was to create an entire parallel set of awards, duplicating all the Hugo categoriesfor fantasy instead of SF. He was talked into scaling that down into one Life Achievement Gandalf, but that was given at worldcon for a number of years, until his death.
SF and fantasy and horror aficionados in the film and television industry, feeling that SF and fantasy was too often ignored by the Oscars and Emmys, started the Saturn Awards, which continue to this day.
Wiscon, the feminist-oriented convention in Madison, Wisconsin, created the Tiptree Awards to recognize outstanding works of SF and fantasy that examine issues of gender.
The World Fantasy Con has the World Fantasy Awards, sometimes called the "Howards" or "Howies" for their iconic trophy, a wonderfully grotesque bust of H.P. Lovecraft by Gahan Wilson. Both fantasy and horror (not not SF) are eligible for that one.
That did not prevent the Horror Writers Association from starting their own award a few years later, partly because some of them felt that the Howard did not go to horror often enough. Their Bram Stoker Award is not, as one might think, a bust of Bram Stoker, but rather a delightful gothic ceramic statue of a haunted house.
A small Kansas convention started the Balrog Awards, for reasons that remain unclear. Among writers, it was also known as "the coveted Balrog." The trophy was quite imposing, especially from the rear. (I won one once, in its last year, but the trophy was smashed in an auto accident before it could be mailed and never replaced, and the organizer went to Oman).
Some of the Puppies have complained the media tie-in books never win Hugos. That's true, they don't (and shouldn't, in my opinion). Some of the writers of media tie-ins felt the same way, however, and instead of bitching, they created their own awards, the Scribes. Those are still going as well. Here, see: http://iamtw.org/the-scribe-awards/scribe-award-nominees/
The Scribes are presented at San Diego Comicon. So are the Inkpots, comicon's own awards, which they've been giving for decades. Also the Eisners, THE premiere award for comics and graphic novels. (I have never been sure why the hell the Hugos needed a Graphic Story category, when the Eisners already existed).
The Hugos are not the only award presented at worldcon either. Libertarian fans, wanted to recognize libertarian fiction, present the Prometheus Award at worldcon annually. (And hey, I gave my Alfies at worldcon too, though I hope they don't need to become a tradition). There are also the Hogus and Black Holes, though admittedly those are more satire than honor.
Bubonicon, our own local con in New Mexico, used to give the Green Slime Awards, a brainchild of Horrible Old Roy Tackett, for the worst SF of the year. That stopped when Roy passed.
British fans, not content with the awards that Americans were handing out, have their own British Fantasy Awards, and also the prestigious Arthur C. Clarke Award.
The Australians, Canadians, Czechs, Spanish, and Japanese all have their own SF awards as well. And there are doubtless many more I am not aware of. The artists, wanting to honor more of their own than were being recognized by the Best Professional Artist Hugo, founded ASFA and began presenting Chesleys annually at worldcon.
Additionally we have the John W. Campbell Memorial Award (not to be confused with the John W. Campbell Award), the Pilgrim, the Sturgeon, the Heinlein...
Also, hey, we have Reddit, and their VERY cool new Stabby Award, an engraved dagger:
No doubt I have left some out. The point being, there are a LOT of awards.
But there is always room for more. A great many of the awards discussed above were started precisely because the people behind them felt someone was being overlooked by the Hugos and/ or other existing awards, and wanted to give an "attaboy" to work they cherished.
There is no reason the Sad Puppies should not do the same. Give them at Dragoncon, give them at Libertycon... or, hell, give them at worldcon, if you want. Most worldcons will give you a hall for the presentation, I'm sure, just as they do for the Prometheus Awards and the Seiuns. Or you can rent your own venue off-site, as I did with the Alfies. Have a party. No booing, just cheers. Give handsome trophies to those you think deserve it. Spread joy.
That's what awards are supposed to be about, after all. Giving some joy back to the writers and editors and artists who have given you so much joy with their work. Celebration.
Since RAH is already taken by the Heinlein Foundation for its own award, maybe you should call them the Jims, to honor Jim Baen, an editor and publisher that I know many of you admire. If you launch a Kickstarter to have a bust of him sculpted for the trophy, I'll be glad to contribute. (It may surprise you to know that while Jim Baen and I were very far apart politically, we shared many a meal together, and he published a half dozen of my books. Liberals and conservatives CAN get along, and usually did, in fandom of yore).
Go for it, and maybe those puppies that you're so concerned about will finally have a reason to smile.